Blue Chip Issue 85

BLUE CHIP FPI FPI as our

BLUE CHIP FPI FPI as our members are mainly from the financial services industry. Transformation at FPI refers to the inclusion of a diverse group of people – including but not limited to people from various demographic backgrounds, identities, race, age, beliefs, values, skills and different ways of thinking. This group of people participates in and forms part of our governance and committee structures as well as our staff and membership base. FPI supports and works with other associations, networks and bodies such as the Women in Finance Network, LeanIn Circle, Association of Black Securities and Investment Professionals – ABSIP (MOU in draft stage) as well as the Insurance Sector Education and Training Authority (INSETA) to support individuals with either mentorship or funding to become members of FPI. Via these programmes, we aim to transform the profession to a more diverse one. One challenge the financial planning profession faces relative to other professions is an inconsistency in the professional qualification required to give advice. FPI is the “guardian” of the CFP® professional qualification, and yet most financial advisors operating in South Africa do not have this qualification. What is FPI doing to change this? This question confuses the profession and the industry. There is consistency with regards to qualifications obtained to become a professional member of FPI. Our qualifications are aligned to clear learning outcomes codified in defined curriculums that are updated every three to five years depending on the results of the job analysis surveys conducted locally and internationally. It is rather a CFP® designation2. To become a CFP® professional, candidates must meet all four points below: 1. An underlying South African Qualifications Authority (SAQA) registered qualification (eg a Postgraduate Diploma in Financial Planning — NQF 8) 2. Three years of relevant financial planning experience or a one-year mentorship programme completed 3. All candidates must write the professional competency examination (PCE) commonly known as a “board exam” in other professions 4. Meet the Code of Ethics and Practice Standards on an annual basis. Once a CFP® professional, your membership needs to be renewed on an annual basis by completing an ethics declaration, paying the required membership fee and completing 35 Continuous Professional Development (CPD) hours per annum (20 technical, 10 general as well as five ethics and practice standards CPD hours). To give financial advice as defined in the Financial Advisory and Intermediary Services (FAIS) Act, BN 194 of 2017 (fit and proper requirements), financial services providers FPI has a fully developed mentorship programme, Mentoring the Professional of Tomorrow, that is free for anyone to use. (FSPs), Key Individuals and representatives must have a relevant underlying qualification. The onus is on the FSP to ensure that the qualification is relevant. FPI commented in the Retail Distribution Review (RDR) Advisor Categorisation Paper3 and confirmed that regulatory protection of the title, Financial Planner, is desperately needed as currently anyone can call themselves a financial planner. This creates massive consumer confusion. When it comes to the qualifications required to be licensed under the FAIS Act (BN 194) we are working with the FSCA and INSETA to ensure that, like other professions, we have qualifications that are fit for purpose. We acknowledge that this is not a quick fix, and we should not forget the history that got us to the point that we are at now. Given the history of the country and the industry, it seems that black financial advisors face three key challenges: access to markets, access to funding and access to skills. It seems that many industry players focus much energy and resources on skills training, but the other two challenges seem to receive less attention. What role can FPI play in helping shift this dynamic when it comes to access to markets and access to funding for black financial advisors? This is a great question. FPI works closely with INSETA to obtain funding that assists black (as defined in the B-BBEE Act) financial advisors to gain access to the market, but also funding needed to pay for their studies and a stipend while completing a learnership and/or mentorship programme at an FSP or financial planning practice. FPI has a fully developed mentorship programme, Mentoring the Professional of Tomorrow, that is free for anyone to use. It is important that the mentee finds a mentor that matches themselves as they must have a good working relationship that is beneficial to both parties. We are currently registering an education and training trust. Delays at the Johannesburg Master’s Office have hampered the process. The sooner we get the trust off the ground, the sooner we can help more upcoming, young, unemployed people to become qualified financial advisors and planners. FPI states that its mission is “to advance and promote the pre-eminence and status of financial planning professionals”. What do you believe still needs to happen in the financial planning profession for it to achieve the same level of recognition and respect as other professions such as law, medicine, accountancy, engineering, etc? Financial planning is a relatively young profession in comparison to law and medicine. The profession was only born in 1969 at an airport in San Francisco when a group of talented, like-minded people recognised the need to professionalise financial planning. 22 www.bluechipdigital.co.za 2The FPSB owns the CFP® mark outside of the US. CFP® is also a SAQA registered designation. 3Referring to specifically Proposal T.

FPI BLUE CHIP Other professions like law, medicine and engineering are all statutory professions (established by an act of parliament) or enjoy some form of regulatory title protection (like in the accountancy profession). We do not have this for financial planning yet – well, in South Africa at least. Regulatory protection of the title Financial Planner is in draft stage currently and we can only hope, for the sake of consumer protection, that regulatory title protection comes in sooner rather than later. What are the biggest challenges that FPI faces in delivering its vision of “professional financial planning for all”? Reflecting on our top two challenges: • Our biggest difficulty remains growing our numbers sufficiently across all demographics to provide professional financial planning and advice for all. We need a more diverse membership base to serve all South Africans better. Some of the issues have already been highlighted in this interview (awareness of the profession, recognition of our professional members by employers, funding for students to study and join the profession, to name but a few). • In most professions, completing the required CPD hours to remain competent and in good standing within a profession seems to be problematic. This is because it is seen as a compliance burden rather than a strategic advantage. Mindsets around CPD must change: it should not be a tick-box approach, but an opportunity to set yourself apart from the rest by ensuring that your personal development plan speaks to the areas that you need to grow in. CPD should be strategically aligned to what your financial institution or practice is trying to achieve. In achieving its mission, FPI has identified six actions that it seeks to undertake. We have questions specific to each of these actions: 1. Improving the quality and accessibility of professional financial planning for all in Southern Africa. How do you see people who can’t afford to pay for financial planning getting access to professional advice for free rather than becoming victims of “financial advisors” who are just salespeople wanting to sell products to them? Financial inclusion and access to quality advice is a global problem. What we must appreciate is that there will always be some form of fee that a client will have to pay to access financial services (products, advice, etc). These fees present themselves in many shapes and forms – from regulated commissions to fees for advice to fees for assets under management (AUM). As per the discussion above, the regulatory environment has been enhanced to make it clear what a provider or representative may charge for advice and related services. We must look at national models where access to advice and paying an advice fee could be an allowable tax deduction, for instance. Another way is to allocate more www.bluechipdigital.co.za 23