What financial planners must do to become a profession

To be regarded as a serious profession, the industry must differentiate between properly qualified financial planners and those with lesser qualifications, writes Mike Taylor.

Would you accept a complex medical diagnosis from an enrolled nurse? Why then should consumers be expected to accept complex financial advice from someone armed with nothing more than RG 146?

It is axiomatic of the problems confronting financial planning that at the same time as the Financial Planning Association (FPA) pursues the objective of becoming a ‘professional association’, the Australian Securities and Investments Commission (ASIC) is reviewing the appropriateness of RG 146 as an entry level, while a survey has already answered the regulator’s questions by declaring RG 146 does not measure up.

Then, of course, there is the reality that irrespective of whether a person possesses an RG 146 certificate or a masters degree in finance, they are equally entitled legally to describe themselves as a ‘financial planner’.

This is the essence of the dilemma confronting the industry and at the core of why the Federal Government’s Future of Financial Advice (FOFA) proposals can be regarded as treating symptoms rather than an underlying disease.

Indeed, it could be argued that the FOFA proposals and their validation of the role of intra-fund advice will simply complicate matters further by legitimising the concept of ‘industrialised’ call-centre advice provided by people possessing little more than RG 146 or its successor qualification.

As organisations such as the Association of Financial Advisers (AFA) prepare to next year pursue an advertising campaign selling the value of financial advice, the industry must quickly come to terms with the need to develop a regime of universally accepted educational qualifications and designations.

That regime must have at its core an acceptance that only those who are appropriately qualified can call themselves a ‘financial planner’ and that those people must thereafter undertake studies sufficient to ensure their qualifications remain up to date and relevant.

Such a regime should, of course, ensure a place and a role for those possessing lesser qualifications, but those people should not be entitled to call themselves a ‘financial planner’.

Only when such a regime is put in place and underpinned by appropriate ethical standards can the Australian public be expected to accept financial planning as a ‘profession’ in the same context as medicine or the law.

When the FPA and the AFA in 2011 press their cases on the value of financial advice, they should do so on the basis that comprehensive advice provided by a fully qualified financial planner has a greater value than that provided via a call centre.

To do otherwise is to risk acceptance of a lowest common denominator.