Blue Chip Journal Issue 76

FPI
WHAT
IS IN A
NAME? WHY
PROFESSIONAL
NAMES MATTER
Recent developments
are set to provide clarity
in terms of financial advisor
titles and regulatory certainty for
financial planners in South Africa
“
Arose by any other name would smell as sweet,”
said Juliet to her off-limits Romeo. While this may
be true for star-crossed lovers, it doesn’t apply
for professions. If I were to introduce myself
as Dr David Kop, you would immediately place me as
a qualified medical doctor, with a professional status.
You would know instantly that I had been through a
rigorous process of education and training, that I had
pledged an oath to act ethically towards my patients and
that I am “regulated”.
In December 2019, the Financial Sector Conduct
Authority (FSCA) released its long-awaited discussion
document on the categorisation of advisors. Among other
matters, the paper deals with the title(s) that advisors
may use – a hotly debated topic since the release of the
original Retail Distribution Review document in 2014.
Clarity for financial advisors
While the Financial Advisors and Intermediary Services
(FAIS) Act has provided consumer protection and
increased the competency and ethical requirements for
financial advisors, it only regulates advice around financial
products. If a person stops short of recommending a
particular financial product, they will fall outside of the
definition of financial advice in FAIS.
Notably, FAIS does not protect the job title of financial
advisors. There is, in fact, a growing global community
of people who call themselves financial planners and
financial advisors (or some other variant of this) who,
because they do not advise on financial products, fall
outside of the regulatory net.
This is problematic as it creates confusion in the
consumer’s mind about who and what a financial
advisor is and what competency level they can expect from
a financial advisor. This is frankly dangerous: consumers
need protection from exploitation by unqualified and
unethical individuals. The FSCA, therefore, wants to ensure
that the title used by financial advisors will promote
consumer understanding of:
• The scope of products and services the advisor
may recommend, and limitations on that scope. For
example, whether a range of products from different
suppliers can be offered or only those of a particular
supplier or group.
• The type of relationship between the advisor and the
product supplier/s.
• Which entity (advisor, supplier, or both) may be
held accountable for the advice provided and the
performance of the product concerned.
At the FPI, we believe that it would be almost
impossible to meet the objectives outlined above with
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