The professional planner has arrived

One of the great financial services debates of this decade has been whether financial planning is a profession.

By Gerard Doherty

One of the great financial services debates of this decade has been whether financial planning is a profession.

And by profession, I don’t mean the separate issue of the need for greater professionalism by individual financial planners brought about by a tougher operating environment. Being a profession doesn’t mean members automatically show professionalism in the way they deal with clients.

I believe that it is now fair to say that not only is financial planning justified in claiming it is a profession but that its practitioners are also showing much more professionalism in the quality of the advice they give and in their approach to client relations.

Generally speaking, characteristics of a profession include competence, service, accountability, a body of knowledge and an ethical approach.

These characteristics are much more evident in the world of financial planning today than they were at the start of the decade. Changes in the industry as well as financial planners’ own desire to be seen as professional have been the prime drivers of change.

For example, the concept of continuing education was rarely discussed ten years ago. Today it is accepted as essential. As a result, financial planners now have greater knowledge and competence, and their client receive better advice.

Even the regulatory environment which was much feared and hated in some quarters, can be seen as insisting on increased professional behaviour by planners in areas such as accountability and ethical practice.

There have been a number of other external and internal influences and developments that have changed the way things are done and resulted in the financial planning industry being justified in laying claim to being a profession.

In turn these have, I believe, led to an extraordinary rise in professionalism by the vast majority of individual financial planners in client relations during the latter half of the 1990s.

The latest Perpetual Adviser Pulse survey, which we have undertaken every six months for the past few years, indicates shifts in attitudes and opinions by advisers which reflect greater professionalism.

Where a year ago, compliance issues and legislation were the issues occupying the minds of financial planners, today it is GST and other aspects of the Howard tax package. Compliance is no longer the major concern it was because professional financial planners have learned to manage the performance issues involved.

Managing the issue of GST is also likely to be handled professionally by advisers. The full impact of GST on financial services is still unclear, but it certainly won’t automatically lead to reduced use of advisers.

Certainly it needs to be managed well. Financial planners need to communicate that the GST they are charging for is not a cost they are creating but another government charge that affects all service providers. Indeed the total tax reform package, and its impact on tax effective investing, should be seen as another opportunity for planners to prove their value to clients.

Another change uncovered by our surveys that indicates the financial planning industry’s willingness to learn and adapt is the use of the Internet. During the past 18 months access to the Internet in financial planning offices has increased by 50 per cent to 93 per cent of those surveyed. Daily use has increased from 49 per cent to 65 per cent.

The surveys also indicate that financial planners are more confident as they become more professional. Two years ago, 11 per cent of the responses rated competition as being of major concern, whereas this is now only 4 per cent. Eighteen months ago, concern about the standard and image of financial advisers rated an 11 per cent response, whereas this has now dropped to 2 per cent.

All of this suggests that financial planning has matured considerably in the last decade, proving its professionalism and worth. Financial planning is now well placed to build on this strong base as a profession.

Gerard Doherty is the general Manager of retail business at Perpetual Investments.