The noble planner?

Financial planning is the first new, genuine profession in 400 years and the first truly international profession in the history of mankind.

So says Dick Wagner, the opening plenary speaker at this year’sFinancial Planning Association’s (FPA) annual convention.

And, he adds, financial planning will become the most important profession of the 21st century.

“When I say we’re the most important profession, I think we’re dealing with a force which is really the crux force of many of the issues that face us today.”

The force, of course, is money and Wagner argues that money is the most powerful, pervasive and unilateral force on the planet.

“Money is at the heart of everything - it is embedded in everything we do,” Wagner says.

“Money is might and therefore helping people to understand what it is and more importantly, what it isn’t, is critical.”

Financial planning therefore needs planners who are professional in the truest sense of the word and Wagner is convinced the industry already has them.

People, even today, are being ‘called’ to financial planning, he says, the way doctors, lawyers and theologists are called to their professions.

“In what I would call the more dedicated ranks of the [financial planning] profession, there is a real strong sense of calling, a sense of mission — I think much stronger in fact than some of the more established professions.”

Let’s back up a bit.

Wagner combines a common-law definition of a profession, which says to qualify, a vocation must include: “an esoteric body of knowledge, a minimal educational curriculum, altruism and a code of ethics” with Webster’s dictionary definition saying (amongst other things) that a profession is “a calling requiring specialised knowledge and often long and intensive academic preparation”.

In Australia, our industry can tick most of these requirements off — there is strong evidence that financial planning is building a sound body of knowledge; PS 146 is ensuring that financial planners meet minimum educational standards; there are financial planning degree courses in Australian universities; and the FPA has long had a code of ethics.

But is financial planning really an altruistic calling in which servicing the needs of others is the prime motivation?

A calling implies nobility. There is nobility in being a doctor: you cure someone or ease their suffering and that is noble, whether or not you are paid for it. The same applies to law: you fight for social justice and that is noble in itself, regardless of the remuneration.

Theology is, by Wagner’s definition, perhaps the most noble of all professions, since remuneration is minimal and in some cases non-existent — priests and bishops, rabbis and monks do what they do not for the fame and fortune but because they are called by God to serve others it is altruism in perhaps its purest form.

Can financial planning, at least in this country, sincerely claim to be as altruistic as any of these traditional professions when two of the industry’s most vicious debates — fees versus commissions and who owns the client — are not about the client at all but about how to charge for services rendered and who ‘owns’ the source of revenue?

Regarding financial planning as a profession becomes an even more difficult concept to reconcile when you consider that financial planners work with money, which may equal ‘might’ but does not necessarily equal ‘right’. There is, and always has been, rightly or wrongly, a stigma attached to making money — even if it’s on behalf of someone else.

But Wagner counters that no profession is clean. “I don’t think anyone in a profession works in a clean environment,” he says. “Law, at least in the United States, is a pretty nasty way to earn a living; doctors are up to their elbows in human plumbing. Each and every profession has its noble aspects but none is totally clean.”

All in all, he says, working with humankind is a pretty mucky business but in some ways, financial planning is cleaner than the traditional professions because it is younger.

“While I respect what other professions do, I suggest they also have legacy issues that are not particularly positive, whereas we are creating a profession from a relatively clean slate — there’s not a lot of back-cracking.”

But is being young a virtue? It means that financial planning does not yet have centuries of tradition, huge bodies of knowledge and time-honoured practices on which to fall back.

Wagner says that while financial planning may not have any real history of its own, it has the benefit of learning from the established professions.

“We’re taking a lot of input from traditional ways of earning a living.”

But that’s not to say that he expects financial planning to become an accepted profession quickly or easily. Financial planning is not a finished work, he says, and is unlikely to become one in his lifetime. To become a profession, the industry still needs to overcome some fundamental barriers and to do that takes time.

“Things don’t happen at lightening speed when you’re talking about creating something literally from a dead stop 30-35 years ago to something that’s a worldwide concept today. I think the progress has been fairly spectacular [to date], but we’re moving through a lot of things.”

One of the things the industry is moving through is the change of focus from sales-based to advisory-based, and Wagner expresses concern when told of the big banks buy-up of distribution in Australia.

“I fundamentally believe in free enterprise with an asterisk,” Wagner says. “And the asterisk is that I think independent advice ought to be independent. I believe product is important in the relationship, but I am concerned about forgetting what comes first — the client or the product. I think we all have concerns in that arena.”

That said, he is optimistic that financial planning is moving away from its sales base and becoming a true advisory profession.