Professionalization of counseling hampered by licensing
The current licensing regime has fundamental problems that prevent financial planning from being a real profession, according to an association.
Talk to Money management, The Managing Director of the Financial Planning Association of Australia (FPA), Dante De Gori, said that the industry had the distinction of being recognized as a true profession being the duty of the best interest, compensation disputes had been deleted and needed a degree.
However, the last piece missing was how financial planners were admitted into practice.
âIf you think of lawyers, accountants, engineers, they are admitted to the profession. In our space, you become a financial planner through an employer or a licensee. The person you work for ‘anoints’ you as a planner and when you no longer work for that employer you are no longer a planner, it’s not a real profession, âsaid De Gori.
âA person should be fully responsible and accountable for their certificate of practice or their ability to practice. We therefore argue that the individual recording should be done by authorization from an independent third party and should be withdrawn from licensees. “
With the Better Advice Bill Seeking to enroll counselors individually by 2023, questions remained as to whether this would increase the ever-growing cost of counseling.
De Gori said the cost would decrease with just one set of regulators by removing the Council of Tax Practitioners and the Financial Adviser Standards and Ethics Authority (FASEA).
He noted that individual registration would remove the responsibilities of many licensees and reduce costs.
“The license holder is still suing the CPD advisers [continuing professional development] records and if they’re going to take the exam, where they’re at with education – they shouldn’t be, âDe Gori said.
âDoctors, lawyers and accountants are individually responsible for their own training. Employers can help by offering courses, but they shouldn’t chase after counselors like little kids.
âWe want to change that and it will change the cost structure in financial planning firms if this part of the process is no longer an obligation for licensees to do so. It’s also about streamlining, reducing costs and eliminating inefficiencies. That is why we want to restructure the licensee regime.
De Gori said the FPA is looking to change the licensing regime over the next five years and that there is real momentum given that the Australian Law Reform Commission is due to be completed by 2023. The commission has included the disclosure of licenses in its reform.
âRealistically, over the next five years there is a real opportunity to make some real, significant reform changes. If we don’t, then everything we’re doing or thinking about doing around the cost of advice, and professionalizing the consulting profession is just tinkering around, âhe said.
âThis has to happen if everyone really wants financial planning to become a true profession and without it it can’t be.
âUnlike other professions, there is always this licensing regime that links the individual advisor to his master, his employer, and therefore planners cannot be truly independent. It doesn’t matter what the law says if they have to do if they have conflicts between their employer’s demands and their demands.
âIt’s not just about authorization, advisers are allowed to give advice on financial products, so this product-only advice link is enshrined in legislation and should therefore be removed. This separation of product and licensing advice must therefore occur. “