As the FPA marks 30 years of supporting the financial planning profession, the organisation continues to adapt to better meet the needs of members. Chair David Sharpe CFP® speaks to Miriam Fine about the continuing journey of financial advice and the evolving role of the FPA as a professional association.

Since 1992, the FPA has worked to uphold the highest standards in financial advice. As a professional association, it is committed to representing the interests of members, giving them better opportunities to build thriving businesses, as well as being well equipped to support the financial wellbeing of all Australians.

During the last 30 years, financial advice has evolved from an industry to a profession. It has undergone a raft of changes in legislation, standards, compliance and conduct, from the FOFA reforms beginning in 2012 to the Hayne Royal Commission in 2018, and legislative changes resulting from the report’s recommendations.

These are just some of the more significant amendments to the Corporations Act and the regulatory framework within which financial planners operate. Looking back on his time as a financial planner and FPA member, David Sharpe CFP^®, Chair of the FPA Board, highlights an amendment he believes was a particular important moment in the development of financial planning as a respected and trusted profession.

“For me, the time when the terms ‘financial adviser’ and ‘financial planner’ were enshrined in law was a significant turning point,” says David. “Up until then, there was little to stop individuals from promoting themselves as financial planners, regardless of their qualifications and experience. This change, which the FPA Board and management had been advocating for more than 10 years, was a critical step forward for financial advice.”

This important change in financial planning legislation and regulation was accompanied by the introduction of standards for education and ethical conduct for financial planners. This took place around the time David joined the FPA Board as a director in 2016, but was a result of significant effort by incumbent and previous FPA Board and team members.

TRUSTED TO DELIVER

It wasn’t long before the Royal Commission into Misconduct in Banking and Financial Services was announced, with hearings and submissions taking place in 2018.

Four years on from the inquiry, the Quality of Advice Review is now in the process of determining how these ongoing reforms have impacted the advice consumers now receive from financial planning professionals.

“This review was a recommendation that came out of the Royal Commission,” says David. “Our policy and advocacy team have engaged extensively with the review committee and from the proposals we’ve seen so far, there seems to be consensus that the regulation for financial advice has been overcooked. The vast majority of financial planners who are seeing clients from day-to-day are well qualified, and acting on the basis of professional judgement and ethical conduct at all times. With a few exceptions, who must be held to account, financial planners can be trusted to act as professionals.

“The reforms have certainly contributed to this. We now have all the hallmarks of a profession in place – ethics, experience, education, and examination. But some of the other regulatory requirements are producing frustration on both sides – for financial planners and clients. In conversations and documents, doing what the regulator requires us to do can really take away from the quality of advice a client will experience.

“If we can acknowledge that current standards are a strong foundation for trust and professional conduct, then a financial planner should be able to answer a simple question from their client about superannuation without having to deliver a full Statement of Advice. It’s a bit like going to a GP about a sore knee and not getting a recommended treatment or referral until they’ve done all the bloodwork to screen for cancer.”

A UNITED COMMUNITY

Becoming a highly qualified financial planner was David’s initial motivation for joining the FPA almost 20 years ago. “I joined in 2003 because I wanted to undertake a course of study to become a Certified Financial Planner^® professional. At the time, I saw the benefits of membership in terms of meeting my own needs. Joining a professional body was about taking my education and training as far as I could for the purpose of my own career.”

In the years since, David has come to appreciate how much it means to be part of a community united by common goals for their clients and profession. “In 2011, our members voted to become an association of individuals, moving away from the corporate membership model. It was a landslide result, signalling that we are an association of individual members, and it’s the needs and interests of those members that have been the focus for all our work in the last decade. And in 2020, we introduced our MAC strategy – members, advocacy and consumers – which has been guiding further development of our activities and programs and will do so right through to 2025.”

One of the key goals of the MAC strategy and FPA policy platform is to see the rights and responsibilities of professional financial planners enshrined in law and legislation, with licensing for individuals. “This belief that individual practioners can be trusted to act as professionals must go beyond agreement and understanding, and be enacted in law,” says David.

2020 was also a year when financial planners were forced to rethink their traditional face-to-face model for delivering advice, as well as how they connected with their professional community.

“The COVID pandemic introduced a step change in the financial advice world, as it did across many other professional services,” says David. “Historically, we had a very strong focus on geopgraphic communities with our FPA Chapters. We are now adapting to serve our members through communities that share common interests, not just geography, finding new ways for them to share amongst each other and with the FPA. It’s involved a lot of hard work, and there’s still more to come to ensure we improve how we interact and engage with our members.”

THE OUTLOOK FOR ADVICE

As COVID pushed the role of technology further up the financial advice agenda, there continues to be much discussion and work by the FPA in developing guidance and best practice on delivering digital advice. However, David suggests that the role of technology is to deliver more from advice, rather than replace the human element.

“We’ve had technology that’s capable of flying planes for some time now, but that doesn’t mean we’re ready to replace pilots,” he says. “People still want to sit in front of a financial planner and experience that human element of the advice process. What technology can potentially do is enable planners to deliver a complex, customised service to more people.”

David also highlights the role of technology – and regulatory settings – in supporting business models that are capable of delivering the advice Australians need.

“Clients are not homogenous and nor are financial planners. Both technology and demand from clients are driving a plethora of business models, from small practices run by a few individuals to larger corporate-style businesses. And we need policy settings to support this choice for clients,” he says.

“This is why the FPA needs to continue doing what we’re doing to support the provision of professional, high- quality advice through flexible models that suit the needs of our market. We achieve this through robust advocacy in consultation with all stakeholders, including members, government and the regulators.

“Another critical element is in the delivery of appropriate tools and services that add value to our members. With resources, such as filenote toolkits and professional year toolkits, we are always finding new ways to be an enabler for our members and help them continue to service their clients to the highest standard.”