Advisers heading down the same path

Who is best qualified to give advice, accountants or planners, has been a long running debate. John Wilkinson looks at how this debate is developing and the influence of regulation.

The education of financial planners and accountants has developed over the years and with it, claims and counter claims of superiority.

The subject has been thrust into the spotlight, however, with the Government's proposals within the Financial Services Reform Bill (FSRB) to allow professional bodies to license financial planning advisers on behalf of the Australian Securities and Investment Commission (ASIC).

The FPA has vigorously opposed this move, which is still to be debated in Parliament, with the argument that accountants and lawyers would have the same training as financial planners. Needless to say, this is a statement the accountants and lawyers would disagree with.

But what is the difference between the two professions of planners and accountants?

The accountant's entry level is through a university degree in such subjects as business or commerce.

"We are looking for a core level of knowledge in such subjects as accounting, auditing, tax and company law," says Australian Society of Certified Practicing Accountants (ASCPA) national manager of education Margaret Webb.

"A pass in those subjects enables the student to join the CPA as an associate member. At this stage they are accountants, not professional accountants."

The accountant then has to complete the CPA program, which consists of study in five subjects, two of them compulsory: corporate governance, accountability and reporting on a professional practice.

This period of study lasts a further three years, and, subject to satisfactory results, the accountant then can be classed as a professional member of the CPA.

"We have moved away from compliance-based study, for example accounting standards, to more fraud and ethical-based standards and the regulatory environment," Webb says.

"It reflects a better appreciation of the current business environment with deregulation and society concerns about corporate compliance."

Financial planners' basic education has become more complicated as new regulations are being proposed by ASIC.

In its Interim Policy Statement (PS)146, ASIC has laid down guidelines for the basic training of planners.

For those wishing to join the financial planning industry, ASIC has broken the initial training down to what is called Tier 1.

This requires a planner to have a detailed understanding of the relevant industry and product-advising skills required, analysis and plan approaches to technical

problems and to know how to analyse strategies for clients.

FPA acting chief executive officer Ken Breakspear says the PS146 is a benchmark for the standard a planner needs to achieve to be licensed.

"ASIC is defining a minimum policy which students will have to achieve from 2002," he says.

"PS146 will enable the student to have a core knowledge, but there will still be entry level requirements."

PS146 is also a minimum standard, and the Diploma of Financial Planning program and the DFP unit 1, the minimum study level for a proper authority holder will still continue at various educational institutes around the country.

PS146 has a second level which is for advisers who handle deposit-taking accounts and risk products. There will be an educational set of standards for planners moving into these areas of advice.

Similar to the CPA professional status, the FPA has introduced the Certified Financial Planner (CFP) standard for planners. This is backed up with a four-unit education program which leads to the CFP designation. All planners will have to complete this program by 2003.

The minimum education standards for CFP require completion of recognised courses like the DFP program, to have held a proper authority for at least six months and to demonstrate levels of experience.

The four units of the CFP covers professionalism and compliance; two levels of comprehensive financial planning and practice management.

Both the CPA and FPA have ongoing training schemes to encourage members to maintain their skill levels.

Both of these continuing education schemes are very similar. The accountant has to undertake 90 hours of professional development training over three years.

"It is in a structured format and there must be a development plan for improving the accountant's knowledge in specific areas," Webb says.

"In order to comply, the accountant must attend conferences and seminars that have structured programs."

The FPA requires its members to achieve 90 points of Continuing Professional Development over a three-year period. A point is equivalent to one hour of development training.

Breakspear says advisers can earn credits from attending conferences, seminars or workshops as well as using on-line programs.

A problem with these types of on-going programs with points or hours requirements is the ease of members bucking the system.

Money Management has attended some sparsely attended sessions at conferences over the years, yet the members register and get the relevant points.

Breakspear admits this is always a problem, but points out that the member who wants to improve their knowledge will attend.

"A professional wants to learn and will make the effort to participate in all sessions," he says.

"We are also encouraging members to attend professional development workshops where there is a proper worksheet and discussion during the session."

Webb also agrees the benefits from sessions comes back to the member's desire to learn and that eventually reflects in the quality of their work.

This consensus highlights the fact that education for both bodies is heading along remarkably similar lines.