New world standard for planning
Advisers could have to meet a new set of guidelines for ethical behaviour and experience if a world standard for financial planning is adopted in Australia.
The International Standards Organisation (ISO) — which also sets standards for safety, manufacturing and consumer goods — this week released a draft world standard for ‘Personal financial planning’ for comment in Australia.
Another 17 countries, including the US, UK, Japan, Korea, Hong Kong and France are also considering whether to adopt the standard.
The draft standard defines a number of ethical principles for financial planners, including that they have to “work within regulatory and legislative frameworks”, “carefully manage conflicting interests” and provide “objective recommendations”.
In order to have the relevant level of experience to meet the standard, advisers must have at least three years working as a planner.
Alternatively, advisers could have two years experience working as a planner and two years of other supporting activities, such as training.
The standard also defines the financial planning process in six steps, including “evaluating the client’s financial status”, “implementing the financial planning recommendations” and “monitoring the financial plan”.
James Thompson, project manager for Standards Australia — the local arm of the ISO — told Money Management the standard was not developed as a prescriptive measure, but as a broad framework to define financial planning.
The standard, which has been in development for three years, is set to be finalised by February 2005.
A committee in Australia, which is chaired by Diversified Portfolio Managers general manager David Williams, will decide if the standard is adopted in Australia.
If the standard is taken up, individual advisers and dealer groups would choose if they want to be certified against it.
“Financial planners won’t have to use the standard but consumers might be educated to understand that if an adviser does not have the ISO standard, ‘we will not go to you’,” Williams says.
AUTHOR
George Liondis
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
