Financial Planning

Nobody is exempt from changes

06 May 2019

Marisa Broome

Marisa Broome CFP® is the owner and principal of Marisa has worked in financial services for over 30 years, initially in funds management and for over 20 years as a financial planner.

FPA Chair Marisa Broome CFP® outlines the advocacy work of the FPA and the initiatives being rolled out to help practitioners adapt to the changing advice landscape.

As Chair of the FPA board, I am helping steer our association and members through the most complex of times. As a practice owner and working planner, I know the pressures of these changes as well as anyone.

I am a proud CFP® professional. I am proud of the difference I make every day in the lives of my clients, and of the business that I have grown. I am also proud of my profession, and it was my desire to give back in a formal capacity that led me to initially run for a position on the FPA board in 2014, and to stand as Chair last November.

I have been a member of the FPA since before it was the FPA, and right from my work with my first client, it has been an interesting journey. With some luck, coupled with a desire to offer a service that was different to what was around at the time, my business has grown with my clients.

My practice started offering advice to young people in 1997, at a time when most of the market was concentrating on retired clients. Accumulation had different challenges, and many in the industry asked how I was ever going to make money if I was going to charge by complexity and time, when the standard was charging via a percentage of fees under advice or a commission.

Fortunately, it worked, and 22 years later, some of those clients are thinking about retiring – and early, as our advice has helped them have this choice.

Challenging times ahead

But my practice has all the same challenges as you – my compliance costs have soared, in addition to the ASIC funding levy, exam costs, bridging courses, code monitoring, higher professional indemnity premiums, and more.

How will I address this? Will I reduce the number of clients I will be able to service? Will I increase my fees?

I’m not exactly sure, but given I have always followed the ‘you can have it all, but maybe not all at once’ path, I have decided I can’t make all these decisions at once nor can I do it by myself. So, I have broken it down to allow me to address one issue at a time. I am talking to my peers, and will be using the services of experts who can guide me through this.

In terms of my role at the FPA, you could say I have walked into the perfect storm. There is no doubt our members – and I put myself in this category – are under pressure. We have increased scrutiny, significant changes to make to our businesses, and the costs of being in business have significantly increased.

There is still a lot of uncertainty around the recommendations made to our profession, now on hold until after the federal election. This is at the same time where our practice values are falling, the certainty of some of our income is under threat, we are seeing the larger licensees announce they will leave the advice space, and we still have more hurdles to jump.

One thing that has been constant over the years has been change – not just in the way we give advice, but also in the advice we give.

The quantum of change at this point is greater, more intense and subject to more political and client scrutiny than ever – both due to the intrusiveness of the level of scrutiny that the Royal Commission has put on what we do, at the same time as there is considerable uncertainty and confusion about what we need to do to meet the new professional standards.

I am not ashamed of saying I have always called for higher standards. I first sat on a National Education Committee for the FPA in 1994 where we called for degree qualifications for financial planners. I believe education is the foundation for any profession, as is constantly improving professional standards. But I too have further study to undertake.

Will battling through the change be worth it? Will it be difficult for our profession? Will it impact the FPA? I have absolutely no doubt on all three.

Walking with you

However, it’s now more than ever that we, as your member organisation, will be there walking with you, working with you, and supporting you to be able to meet the standards.

We have been criticised for not being there for our members, and this is absolutely wrong. I can tell you that, without the advocacy work that the FPA has undertaken on your behalf, life would be much harder than it is.

Let me give you some examples.

Without the work of the FPA, there would have been no grandfathered commissions when FOFA was introduced in 2012, and the Life Insurance Framework would have seen flat 20 per cent commissions if the original recommendations had not been challenged.

The FASEA education requirements have been quite a journey, and it is this uncertainty that has caused much confusion. However, prior to the legislation, there was a push from some sectors to see all existing advisers having to obtain an undergraduate degree, plus sit an exam every two years. Under the December 2017 initial release, 91 per cent of our members would have needed to do a Graduate Diploma.

Under the second draft released in March 2018, the work we did saw this drop to 50 per cent of our members needing to do a Graduate Diploma, while in the final version released in December 2018, approximately 50 per cent of FPA members only need to do one course, being the Code of Ethics course; approximately 15 per cent of our members have to do between three and seven units; a further 30 per cent between four and eight units; and fewer than 5 per cent who must do eight units.

The FASEA CPD policy would have been at a minimum of 50 hours, not the 40 we have now.

For those of you that are running your own AFSLs, the fees under the original ASIC funding model would have been significantly higher than they are, while financial planners are now able to witness statutory declarations, thanks to a very long FPA campaign.

And what are we still fighting for? We are still working on the Code of Ethics with FASEA, continuing with the plans to establish a Code Monitoring Body, and meeting with the two main political parties to ensure our views are heard on the sensible implementation of the Royal Commission’s recommendations.

We are working with Treasury, and we are meeting regularly with ASIC, the Tax Practitioners Board, and the Australian Financial Complaints Authority. We are also working with all the main associations to ensure we are speaking with one voice.

We have chosen to advocate for you in a way that sees us invited to the table by all the politicians and regulators – and importantly, we are listened to. Public headlines that challenge and question only serve to close doors, not change the narrative. So please remember, just because the advocacy is not publicised, doesn’t mean it isn’t happening.

Tools and resources

We are also working on a range of initiatives that are designed to help our members adapt to the changing advice landscape.

Recently, we launched phase one of our Return to Learn online program, where we will provide resources to help you work out what study you need to do, where you can do it, and then help you on that education process. Future stages will include menus of all available FPA-accredited CPD programs.

We have embarked on our National Roadshow, which is a free event happening in every Chapter around the country. We have added time to the end of each Roadshow to encourage you to stay and chat, allowing you to connect with your peers and the FPA team.

We will be officially launching the new Match My Planner service at the Roadshow, which is a new way for people to connect with a planner who offers the services they require.

We will also use the Roadshow to launch our new Member Support Line – an avenue for you to use if you need help beyond your family, employer, licensee and peers.

I’m sure our work will draw criticism and I’m prepared for that. I didn’t take on this job because I thought it would be easy. Instead, I took it on because I care about our profession, I am proud of what we do every day, and I want to make a difference for you.

Marisa Broome CFP® is Chair of the FPA.