Push to define may actually confuse
Very fewpeople in the industry would have failed to notice the push to higher education standards that have been going on in recent years, especially after it received a stamp of approval from the Australian Securities and Investments Commission via PS 146.
Such a push can only improve the overall professionalism of the industry and ultimately protect the interests of consumers, however, it has also put in place the groundwork for enormous confusion.
This has come about because the diverse groups that seek to offer advice have also decided to launch a range of designations which identifies them as being qualified and professional.
By this time next year the investing public will be able to pick from a Certified Financial Planner (CFP), Certified Financial Adviser (CFA), Certified Practising Accountant or Chartered Accountant, both with a different Financial Planning Specialist (FPS) designation. These will be administered through the Financial Planning Association, Association for Financial Advisers, the CPA Australia and Institute of Chartered Accountants respectively.
Add to the mix that none of these designations is exclusive of any other, and a financial planning practitioner could have all or any proudly displayed on their office wall alongside any other certification they may have earned.
The problem with having a range of designations available is that it becomes difficult for any of them to become truly widespread and regarded as the peak mark of financial planning excellence in the industry.
Each designation reflects the backgrounds and biases of the holder and in their eyes is a necessary thing, but in the eyes of the investor, what is the difference?
A similar situation exists in the US where a number of designations exist. Despite a few of them having a stronger place than others, they have not further defined the market but actually made it more difficult for consumers to discern between the marks and those who carry them.
It is unfortunate that the wide range of players in the industry feel the need to have a range of planning designations, however, in terms of driving the professionalism of the industry, it may indeed lead to new ways of designating planners.
But, if it does not provide clarity for consumers in selecting an appropriate financial adviser, then those efforts have failed, which would seem to be an odd occurrence in what is universally regarded as an industry which is set to grow by leaps and bounds in the next decade.
AUTHOR
Jason Spits
Recommended for you
As the government announces a public inquiry into the collapse of Dixon Advisory, risk adviser Richard Silberman has detailed the three areas that typically lead to an AFSL's collapse.
With a growing number of advisers now running their own business, they need to pivot their career identity to being a business owner rather than just as a financial adviser if they want to futureproof their business.
Zenith Investment Partners has launched a range of new managed account portfolios over the past quarter, including on Insignia Financial’s Expand platform.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
