Paying closer attention to risk

It’s been a turbulent year.

A downward swing in the market, after years of strong growth and low interest rates took many investors by surprise.

For financial planners it has meant dealing with the emotional responses and decreased financial returns of their clients. For those new to the career of financial planning, this downturn would have been their first exposure to poor returns, a challenging but valuable learning experience.

A new Federal Government in 2007 brought the spotlight firmly onto financial services, with a number of reviews announced, including self-managed superannuation funds, mortgage and credit regulation, credit ratings agencies and research houses, unlisted and unrated debentures, tax, and pensions.

We are still waiting for the much talked about but yet to surface review of the ‘structure, operations, costs of superannuation’.

Despite the number of reviews, there is a renewed sense of energy in dealing with the costs of compliance, burgeoning red tape and the need for clear disclosure to ensure that consumers understand the advice, and products and services that are on offer.

We also had great success with the Tax Agent Services Bill, where we confirmed that financial planners did not have to become tax agents, and with the temporary residents and superannuation requirements.

We created a new Associate Financial Planner (AFP) designation, and we launched our Life Risk Specialist (LRS) designation, the first of many to come.

We launched a significantly improved Continuing Professional Development (CPD) policy for member consultation, highlighting that CPD is not just a compliance necessity, rather an opportunity to maintain personal and professional confidence and proficiency.

Within the Financial Planning Association (FPA), our focus has been on creating more value for members and representing their interests to our key stakeholders. We launched a Pro PI Professional Indemnity Service. We bedded down our professional framework, with a focus on maintaining high standards and professional conduct.

We launched the first CFP brand awareness campaign prior to and along with our annual Financial Planning Week.

Our Small Principal’s conference in Canberra gave many of our members a chance to meet with Senator Nick Sherry and Dr Craig Emerson MP.

Our Future Financial Planners Council was launched to address the shortage of skilled planners and devise new ways to encourage students and career changers to enter into the industry.

Our new Blog Star is a fantastic step toward capturing the next generation of financial planners, and our use of all the latest social media to promote financial planning is also a step into the lives of Gen Y.

Financial planners continued to contend with an anti-advice advertising campaign promoted by industry fund-based product providers.

The FPA’s value of advice campaigns promote the net benefits that can be gained from good professional advice, from a member of the FPA.

The value of advice, in these difficult economic circumstances, has brought the value proposition for financial planners to the fore.

However, it’s been tough on our members as well.

Most recently, after consultation with members, we launched an online Market Volatility Resource Centre, filled with tools to help planners and their clients to deal with the current turbulent market conditions.

The FPA will be paying full attention in 2009 to its ongoing quest for professional recognition and growing its professional membership; the need to promote the value of financial advice; and the need to work with industry, governments and regulators to restore consumer confidence and develop an appropriate model for regulating financial services into the 21st century.

According to research recently conducted by Coredata for the FPA, while many of our members are still in shock, there is a view that this is the correction we needed to have, and one that will clear out any murkiness that may have crept in to the mostly robust financial system. Let’s see if this proves to be the case, this time next year.