The road from Regulatory Exam to Professional financial planner

The first level regulatory exams (RE) will have a positive impact on the way key individuals and representatives conduct their businesses. Even experienced financial advisers learnt that the "old” way of doing things was not in line with the requirements of the Financial Advisory and Intermediary Services Act (FAIS) Act.

FAIS, the accompanying codes and RE has forced industry stakeholders to change business processes for the ultimate benefit of financial services consumers. An important realisation is that having written and passed the first level of regulatory exams does not mean that an individual will be professional.

The word "professional” is often used to infer that a person has sufficient competence and skill to be paid to do something – the opposite of "amateur”. This is a very limited understanding of the concept and does not explain what the public is entitled to expect from a professional.

The origin of the word "profession” is the oath of dedication – called professing – taken by a person who entered a monastery as a monk or a nun. These candidates accepted the discipline of living under the rules of that monastery. The concept gradually expanded to include people such as doctors who accepted the discipline of living in terms of the rules and ethics of their vocation.

Nowadays there are dozens of vocations that are considered professions, defined for the 21st Century as follows: "A profession is a vocation founded upon specialized educational training, the purpose of which is to supply objective counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain".

A profession arises when any trade or occupation transforms itself through the development of formal qualifications based upon education, apprenticeship and examinations. The transformation takes place through a strictly applied code of ethics and conduct and the emergence of regulatory bodies with powers to admit and discipline members.

Professional people have by definition learned specialist knowledge and skills and are able to apply them. The way in which the use of this knowledge should be governed when providing a service to the public can be considered a moral issue termed "professional ethics”.

Most professions are represented by professional organisations that define their ethical standards. Among the commonly held standards are:

• Knowledge

• Skill

• Commitment to the wider good of society

• Commitment to the profession and the good of its members

• Honesty

• Integrity

• Obedience to the letter and spirit of the law

• Transparency of services and costs

• Accountability

• Confidentiality

• Objectivity; and

• Offering "pro bono” services

Professional ethics is regulated by standards as set out in a "code of ethics” to which members of the profession must adhere to prevent exploitation of consumers and to preserve the integrity of the profession. The code typically covers most of the standards listed above.

A code of ethics includes disciplinary statutes so that the profession can ensure that individual practitioners meet the accepted standards, by disciplining them if they do not comply. Professionals who act with conscience can practice, safe in the knowledge that they will not be undermined commercially by those who practice unethically. It also maintains the public’s trust in the profession, encouraging the public to continue seeking their services.

Financial Planners have long regarded themselves as professionals and the Financial Planning Institute (FPI) has provided the necessary components to support this view.

The FPI’s educational standards, Code of Ethics, attitudes and behaviours – and recent adoption of the concept of pro bono services – provide the building blocks that enable us to stand alongside doctors, engineers, accountants, lawyers and other revered professionals.