The possible heavy costs of the FPA’s push to professionalism
The Financial Planning Association's move towards professionalism could turn out to be very costly for the organisation, writes Mike Taylor.
When the outgoing chair of the Financial Planning Association, Julie Berry, delivers her headland address to this week’s FPA national conference she will do so knowing that she will be alienating a portion of her organisation’s membership.
The essence of the messages being delivered by Berry and chief executive Mark Rantall is that the future of the FPA resides in its transformation from industry representative organisation to professional association.
If Berry, Rantall and the rest of the FPA board have been paying attention to recent history then they will know that there is a price to be paid for such transformations.
They will know that when the FPA nearly 18 months ago outlined its program to transition from commission-based remuneration to fee-for-service, a number of members were alienated and lost to the Association of Financial Advisers (AFA).
While many will see merit in the steps to be outlined by Berry and Rantall as the path towards professionalism, a number of others are likely to vote with their feet believing the FPA is no longer representative of their interests or ambitions.
If history is any guide, such people will migrate to organisations such as the AFA and the Association of Independent Financial Planners on the basis that the messages emanating from the two bodies are more representative of traditional industry interests.
The direction that is to be outlined at this week’s FPA conference is not without risk. Inherent in turning the FPA into a professional association is the need not only to abandon some past policies but also to abandon some past practices and deliveries.
In doing so, the FPA will create a service and policy vacuum that will be rapidly filled by other bodies less constrained by the notions of professionalism.
It ought to go without saying that critics of the FPA’s new direction will look at the likely leakage of members and suggest that Berry, Rantall and the organisation’s board may ultimately prove to be guilty of a costly miscalculation.
The question for financial planners is whether they believe they should be regarded as professionals and whether the FPA’s proposals will help deliver that outcome.
In the end, the evolution of the FPA into a professional association may prompt some planners to belong to multiple bodies.
Whatever the outcome, it is likely the announcements made at the 2010 FPA conference will prove a watershed.
AUTHOR
Mike Taylor
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