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It’s time we all recognize financial planning for the crucial profession it is

28 February 2020 Lelane Bezuidenhout, CFP®, CEO of the Financial Planning Institute of Southern Africa NPC (FPI)

In these trying economic times, the people of South Africa deserve a united and skilled financial planning profession. The Financial Sector Conduct Authority (FSCA)’s proposal to provide legislative protection of the term “financial planner” is an important reminder for us all to guard and aspire to the CFP® designation.

In a country where only five per cent of citizens can save enough to retire comfortably, it’s impossible to underestimate the importance of the financial planning profession. Sound, holistic financial advice has the potential to create a brighter future for thousands of South Africans – if they only knew where and how to obtain such professional financial planning ad advice.

A major legislative breakthrough

FPI has been working tirelessly to promote financial planning as a profession as we believe South Africans have a right to receive advice from qualified professional financial planners.

In December 2019 the FSCA published a discussion document that proposes legislative protection for the financial planning profession. The FSCA will acknowledge the professional status of qualified financial planners by reserving the use of the designation “financial planner” for people who hold a professional designation in the discipline of financial planning. The document further recognizes the global CFP® mark as the designation that meets this requirement. The terms “financial plan” and “financial planning” will be similarly protected. This proposal stems from the original proposals in the Retail Distribution Document, specifically proposal T, that was published by the then FSB in November 2014.

What it means for YOU

While the recent announcement is great news for those who have the CFP® designation, it is undoubtedly a cause for concern for the many financial practitioners who don’t. At FPI, we would like to encourage everyone to keep studying: you’re never too old to challenge yourself academically! If you’ve been in the industry for ages, you’ll already know most of the curriculum – in this case, obtaining your CFP® designation is simply a time commitment.

If you really can’t face the prospect of going back to the books, we strongly encourage you to get your young staff to work towards obtaining the CFP® designation. If you are passionate about the power of financial planning to transform people’s lives, you owe it to both colleagues and consumers to protect the profession.

Why professional recognition matters

While savvy individuals have been giving informal financial advice for years, our profession was only formalized half a century ago when thirteen men met in Chicago and outlined the first steps needed to establish a new profession called financial planning.

Compare this to the medical profession, which goes back an amazing 2500 years! The Hippocratic Oath which all doctors adhere to has changed very little from the version penned in Ancient Greece in the fifth century BCE. The legal profession also has Classical beginnings, with the class of legal specialists that established a formal framework in Ancient Rome.

As shown by the medical and legal professions, a professional body benefits professionals and consumers by:

• Providing a strict code of ethics which protects consumers
• Clearly defining the specialist knowledge its members should possess
• Giving the profession a voice by acting as its spokesperson
• Ensuring that the profession never loses sight of its role as a public servant
• Conferring social status on its members – and ensuring they live up to these expectations!

The long and the short

Everyone knows what lawyers and doctors do – and none of us would ever seek serious legal or medical advice from someone who was not fully qualified.

The public needs to know that financial planners have a specific and specialist set of financial planning abilities, skills and knowledge that enables them to provide the expert, tailored financial planning advice that can help people to, for instance, retire financially independently. Financial planning stretches across a wide field of specialist areas that range from financial management to investment planning, tax planning, risk planning, retirement planning and estate planning.

The very good news

While this is only a proposal at this stage, it has remained consistent from the publication of the RDR document in 2014, and will no doubt be law in a few years. So, if you’re working as a financial advisor and haven’t yet attained the CFP® designation, I do encourage you to start studying now and assist us in professionalizing the industry, for the wellbeing of all South Africans.

Quick Polls

QUESTION

ASISA’s lobbying of the SARB to suspend Circular 15, which contained significant changes to foreign exchange controls. What is your take on this accusation?

ANSWER

[a] ASISA was right to seek clarity on Circular 15
[b] Large asset managers are conflicted & will suffer financially if Circular 15 stands
[c] Savers get enough exposure to offshore assets under existing Reg 28
[d] Who cares?
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