CFP qualification's stringent requirements will raise industry standard: FPA
The growing number of financial planners undertaking the Certified Financial Planning (CFP) accreditation will lift the standard of the advice industry as a whole, according to the Financial Planning Association (FPA).
FPA chief executive Mark Rantall said the greater the demand for the CFP accreditation and the more numbers going through, the higher the entry requirements and pass rates become. This pushes up the value and standard of the accreditation, he said.
To enter the program, candidates now require an undergraduate degree, and to complete the requirements, they must have 3 years of supervised experience in the industry and pass a comprehensive exam.
"We have been lifting standards for a number of years now," Rantall told Money Management. "And the training needs to be considered in conjunction with the professional framework that's in place. This framework houses the FPA's educational standards, ethics, practice standards as well as our rules and regulation," he explained.
"It is a combination of all of those four factors that really determine the quality of the professional membership of the Financial Planning Association," he said.
"The CFP is not an easy program to pass," Rantall noted. "And we track that with considerable interest. Together with the five units of the CFP certification, which is conducted - and statistically tested - by Deakin University, we can actually monitor the quality and the pass rate of the program," he said.
Some 5,600 if the FPA's members already have the CFP designation. As the FPA is the only Australian organisation with the licence to issue the qualification, it is estimated that around 8,000 non-FPA member planners are operating without it.
Rantall described this as "a line in the sand issue".
"Moves had to be made to lift planners' standing and to assure clients that they can trust the advice and ethics of their planner. The natural place to go with this is with the most recognised international qualification - and that is the CFP qualification," he said.
The qualification is licensed through the Financial Planning Standards Board (FPSB), an international body that publishes the abilities, skills and knowledge of financial planning in the Financial Planning Competency Profile. Rantall said the FPSB also has an overview of the content and curriculum of the CFP program, and works to ensure those standards are met.
"It's all about not only taking responsibility for putting clients first, but demonstrating that [planners] have the training and expertise to do so effectively," he said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
