Making the professional grade

As the debate surrounding tertiary education for financial planners moves from whether it should be compulsory to what degree should count, Ashleigh McIntyre writes that the Financial Planning Association still has a lot of work to do.

In the quest to become a professional association, the Financial Planning Association (FPA) recently took the bold move of proposing an appropriate tertiary degree requirement for all new members — but it was the reaction to the announcement that was most interesting of all.

Rather than outrage or incredulity, it seems that the majority of advisers agree that a tertiary degree is a good place to start to raise the level of professionalism in the industry. But what that might entail still remains to be seen.

The FPA head of professionalism Deen Sanders said that although there were no details worked out just yet, the FPA would not be taking a prescriptive approach to determining the tertiary degree requirements.

Rather, it will aim to encourage a wide range of options so that members can choose the education that suits them.

The responsibility for approving higher education programs will fall to the Financial Planning Education Council, which will be made up of university academics, industry participants and the FPA.

The council will be established in February next year and will initially get to work on developing the Australian curriculum for financial planning education qualifications.

“One of their early tasks will be reviewing the global body of knowledge [for financial planning] and making sure it appropriately reflects the Australian conditions and the marketplace we operate in,” Sanders said.

“As part of that work it will also be developing the assessment criteria for programs that universities want to put up as approved degree offerings.”

Sanders said the process would be exactly the same as it was in other industries: “All other professions have similar forms of councils that approve programs for direct entry into their professional designations, and that’s essentially what we’re establishing.”

The offerings that will be approved will need to be “more closely aligned” to the global body of knowledge, on which the FPA’s Certified Financial Planner (CFP) qualification is based.

The reasoning is to bring university degrees that have been developed purely or mostly based on the expertise of academics into line with the CFP program and the global body of knowledge.

“What we’re interested in is quality and content. We want to give greater comfort and confidence to members that they can see the programs that deliver them quite clearly into the CFP professional designation program,” Sanders said.

“Right now, based on the program you pick, you might get full exemption from the CFP program’s technical subjects, or you might only get one exemption. That’s something that is a bit difficult to work out, and we want to make sure there’s clarity and good comparability for members on that.”

There are currently more than 12 higher education offerings at the undergraduate and masters level that Sanders believes would meet the requirements, and by the end of next year, he expects this number to almost double.

But a look at the vast number of degree offerings that currently deliver candidates into the financial planning industry suggests that there will be a lot of work to do for universities that want to make the list of approved degrees.

Most universities will be open to the prospect of making minor changes, but major restructuring of degree programs to fit with FPA specifications will not be taken on lightly, said Clive Perring, director of the International Centre for Financial Services at the University of Adelaide.

“We would be a little cautious with the FPA dictating how our courses should go. Every university would reserve the right as to how they offer the courses,” Perring said.

The kinds of degrees that will make the grade are also yet to be decided.

While there are several specific degrees, such as the University of New England’s Bachelor of Financial Services, there are also plenty of broader degrees that offer a major in financial planning that could be approved.

For the University of Adelaide, a broader approach is the method of choice.

“Our view is that people should have a solid grounding in finance, statistics, economics, marketing and management, as well as specialist subjects which teach them how to be financial planners,” Perring said.

Although the University of New England takes a more specific approach to financial planning degrees, associate professor of finance at the University of New England, Martin Hovey, believes that there needs to be a wide selection for members to choose from.

“It has to be broad to accommodate more people across Australia, with both external and on campus offerings,” he said.

Whichever way the FPA goes, Sanders estimated that it would take the majority of 2011 to determine what constitutes an approved degree.

After which, the FPA will release a pathways document highlighting the ways for new members to meet the entry requirements.

As the debate continues, it seems that there is one thing that most can agree on. In order for financial planners to be considered professionals, the move towards tertiary education is essential — starting with new members.