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The debate over the financial planning 'profession'

01 June 2007 Gareth Stokes

What do Doctors, Lawyers, Architects and Accountants have in common? The answer is that the fields in which they practice are all regarded as professions. Individuals who qualify in one of the above careers belong to a professional association, have under


The great debate in the financial services industry is whether or not those working as financial planners can consider themselves members of a financial planning profession, and whether such profession in fact exists.

On Wednesday, 30 May 2007, FAIS Ombud Charles Pillai attempted to answer the question while addressing more than a thousand financial planners at the annual Financial Planning Institute of South Africa (FPI) Convention in Sandton. Love him or hate him, Pillai is an eloquent speaker who uses his legal background to present a convincing argument on the merits of the case.
What does it take to become a profession?

According to Pillai, there are six items which have to be in place before an industry can consider itself a profession. These 'hallmarks of profession' include:

1. A specialised and well defined body of knowledge

2. Membership of a professional body

3. A devotion to public service

4. A well-defined code of ethics

5. A professional status, recognised by the community

6. An association which acts as a spokesperson for the profession

During his presentation, Pillai spent a great deal of time elaborating on each of these points. He believes that professionalism requires an undertaking by the practicing professionals to protect the public interest. Such dedication would ensure that the public acknowledge professionals in a particular field. "To be a professional requires, above all else, someone beyond greed and selfishness," said Pillai.

Where the financial services industry is concerned, Pillai believes that "we are becoming a profession [and that is] an acknowledgement that we are not a profession yet!"

Comparing the financial service industry to the legal profession

Pillai has a strong background in law. He uses his knowledge of the legal field to compare the circumstances prevailing in that profession today, with those in the financial planning industry. The most significant differences are in the fields of education and mentorship.

To practice as a CAT 1 / CAT 2 or CAT 3 financial service provider an individual only requires grade 10 to grade 12 education. Degrees are also recognised, but there is no requirement that such degree be obtained in a financial stream. In contrast, lawyers have to complete a comprehensive legal degree at a recognised tertiary institution.

Mentorship is also absent from the financial services arena at present. Lawyers are required to serve a candidacy before entering the legal profession. In a similar fashion, Chartered Accountants have to complete articles, and Doctors internships.

Pillai also dwelled on the absence of a single professional body to represent financial planners. While one of the stated goals of the FPI is to become the association of choice as the financial planning industry migrates to a professional status, it is still a long way from achieving this objective.

High standard instituted by the FPI welcomed

Pillai was full of praise for the high standards demanded by the FPI of its members. "I appreciate and accept that you have high standards," he said. However, there were still far too many financial planners who were not affiliated to, or bound by the rules of any association.

Another big stumbling block in the financial services industry is that there is no single body governing the financial services industry. Pillai said "we have at least ten different organisations that call themselves variously bodies, societies and institutions all claiming to have some code of conduct."  Each of these associations represents a subset of the financial services industry.

There were also too many regulatory bodies in place. These included the regulatory FAIS Ombudsman and Pension Funds Adjudicator, and various industry bodies such as the Long-term Insurance Ombudsman, the Short-term Insurance Ombudsman and the Banking Ombudsman.

"We have too vast an array of organisations serving members and industry interests and ostensibly serving the interests of the public, and having some kind of government structure," he said.

The way forward

Pillai noted that "until recently, being a financial services provider was simply running a business. It was transaction based, sales driven practices that survived."

With the trend in South Africa toward consumerism and consumer rights all that is changing. A focus on service provision and establishing financial relationships with clients would contribute in creating a financial planning profession to which qualified financial planners could belong.

Like most of the presenters at the FPI Annual Convention, Pillai believes that elevating the South African financial planning industry to a profession is a logical next step. There is, however, still plenty of work to be done.

To allow Pillai the final word: "Even with the advent of FAIS,  I sense that the financial services industry has a long way to go before it reaches that level of confidence in the eyes of the public that it is truly a profession."

Editor's thoughts:
Financial planners are struggling to have their field declared a profession. Would the quest for professional status be helped if the CFP qualification standards were elevated to the same level as that of a CA? Send your comments to

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