Blue Chip Journal Issue 76

In a Global FPSB survey into financial planning, 60% of South
African consumers either answered no or were not sure
whether financial planning was regulated in this country.
only a title, and would require additional
disclosure (that is already covered by
FAIS in any event). We feel strongly that
an advisor’s title should indicate which
activity they are licensed for, and not who
they do it for.
We have proposed the following titles
for financial advisors:
• Financial Product Advisor
• Financial Advisor
Splitting advisors into these categories
will allow for different competency
frameworks. This will also have the bonus
of creating established career paths and
attracting more talented youngsters to
our profession.
The legislation must also include
sanctions for anyone who uses these titles
without being duly licensed to perform
these activities.
What about financial planning?
In a Global FPSB survey into financial
planning, 60% of South African consumers
either answered no or were not sure whether
financial planning was regulated in this
country. If there’s confusion in the financial
advice space, this is doubled when it comes
to the financial planning profession.
There is likewise no current legislation
around who is allowed to call themselves
a financial planner or to describe their
services as financial planning. Unlike the
medical profession, we have so-called
financial planners ranging from the
minimum education requirement to
license as a financial advisor right through
to financial planners who hold the globally
recognised Certified Financial Planner®
professional designation.
Hopefully, this is about to change in
South Africa. The discussion document
contains the following proposal:
“One of the desired outcomes of our
RDR reforms is to enhance standards of
professionalism in financial advice and
intermediary services to build consumer
confidence and trust. To this end, the FSCA
confirms our intent to acknowledge the
professional status of qualified financial
planners by reserving the use of the
designation ‘financial planner’ for those
holding a formal professional designation
in this discipline. Persons designated as
a CFP® professional, who therefore meet
the standards and requirements set by
the Financial Planning Standards Board
(FSPB), would meet this criterion... In
South Africa, the relevant organisation
is the Financial Planning Institute, which
is also recognised by the South African
Qualifications Authority as the professional
body for the financial planning profession
in South Africa.”
We are pleased to see the recognition
of the CFP® designation. Financial planning
is a relatively young profession, having
started only 50 years ago. In that period
the Financial Planning Standards Board
has done much to ensure that financial
planning meets the generally recognised
characteristics of a profession (recognising
that the legal protection offered to most
other professions is missing when it comes
to financial planning). This proposal would
make South Africa one of the few countries
in the world that recognise the professional
status of financial planning.
We believe that the protection of
the terms financial planner, financial
planning and financial plan is important
for consumer protection.
The protection of the title of “Financial
Planner”, as proposed, is more than just title
protection. It allows for the adoption of a
uniform oversight of financial planners that
includes adherence to a world-class code
of ethics, requiring a fiduciary standard
of care, and a set of professional practice
and competency standards developed
from empirical research into the practice
of financial planning.
Financial planners, through their professional
bodies, will need to demonstrate
professional competency and commitment
by meeting initial and ongoing education,
examination, experience and ethics
requirements. This approach will protect the
public and allow for recognition of financial
planning as a true profession.
The bottom line
For too long now, consumers have been
befuddled by the variety of titles used in the
financial advice industry and the financial
planning profession. Both financial advice
and financial planning are vital to the
economic growth of South Africa.
We believe that affording legal
protection to certain titles can only
enhance consumer trust in financial advice
and financial planning.
David Kop, Executive Director for Relevance, FPI
www.bluechipdigital.co.za
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