1 year ago

Blue Chip Issue 81

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Blue Chip is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry. Blue Chip takes this opportunity to wish the FPI a happy 40th anniversary. Congratulations!


FPI EXCLUSIVE • The FPI designations, and in particular the CFP®, are must-have designations for consumers of financial planning and advice. • The FPI designations are recognised by employers as musthave designations for employees. What are the FPI’s long-term strategic goals? • Leadership. The FPI is the pre-eminent financial planning and advisory standards authority for competent and ethical financial planners and advisors. The FPI’s designations represent the standard of excellence for financial planners and advisors and their respective disciplines in South Africa. • Awareness. The public is widely aware of the value of the financial planning process and of the CFP® certification and financial advice related designations. • Recognition. Financial planning is recognised as a profession. The FPI is recognised by regulation/legislation as the standards setting body for professional financial planning and advice. • Standards. The FPI has established standards of excellence for financial planning and advice, and members are in full compliance with our certification programme standards. What is your strategy in terms of membership growth? Our goal is to grow professional membership across our advice and financial planning professional designations. Focus areas include attracting and retaining younger professionals as well as a more diverse membership base. Engagement with our recognised educational providers, corporate partners and professional practices are key in ensuring growth in both independent financial advice and tied agent environments. Our focus is on growing our professional competency examination (PCE) support as we need to increase our pass rate and improving our mentorship programme. We are using more agile technology to assist us in managing our pipeline, as we have quite a few affiliates on our database who haven’t completed their journey in becoming professional members of the FPI. This is evident from a study we did together with SAQA a while back. Please tell us about the industry benchmarks that the FPI has fashioned. The FPI Professional Practice Standards as well as the FPI Code of Ethics. The Code was reviewed with the assistance of the Ethics Institute of Southern Africa. The purpose of the Code is to promote ethical behaviour. The Code incorporates rules of professional conduct that instill confidence in the members. It includes the framework for financial planning, known as the “six steps of financial planning”. The FPI set clear education standards for both the financial planner and advisor. We aligned our curriculum and competency standards with the globally recognised standards of the Financial Planning Standards Board (FPSB), in which the FPI is the only licensed affiliate in Africa. Via robust industry engagement with practicing financial advisors and academia, we authored and published the curriculum and competency standards for financial advisors. The curriculum includes class-of-business training for most, if not all, classes of businesses as defined in the FSCA’s fit and proper requirements (BN 194 of 2017). We published our CPD policy that serves as a benchmark for many financial service providers who must have a CPD policy as per FSCA subordinate regulations. We have published thought leadership papers on robo-advice, pro-bono initiatives and transitioning to a fees-based financial planning practice. The FPI members’ focus is advice-led and not product-led which makes the transitioning to a fees-based model paper very relevant to the advice-based community. The FPI is the pre-eminent financial planning and advisory standards authority for competent and ethical financial planners and advisors. From a public policy point of view: the FPI is very involved, via our stakeholder engagement strategy, in matters such as the Retail Distribution Review, national health insurance, treating customers fairly via active participation in public comment into the Conduct of Financial Institutions (COFI) Bill, the retirement and social reform and, as mentioned, transitioning to a fee-based financial planning practice. How can you ensure that a financial advisor's advice process is aligned with the FPI’s code? The FPI is not a regulator, but a professional body that sets professional standards that include practice and competency standards. Our practice standards are aspirational and are conduct-based rather than rules-based. It is advisable that financial planners and advisors align their processes to the practice standards of the FPI as they will inherently comply with FAIS regulations which are still very rules-based. What changes would you like to see happen in the industry over the next five years? I would like to see the regulatory environment stabilise. Over the past 20 years, we have been faced with constant regulatory changes. I would also like to see more guidance from Treasury, the Financial Sector Conduct Authority and the Financial Sector Transformation Council on how to develop a more diverse and inclusive industry that is representative of the demographics of South Africa. A big change that I would really like to see in the next five years is that financial management forms part of the South African high-school curriculum. We need to teach children from a young 22

FPI EXCLUSIVE age how to work with money to address the poor savings culture in South Africa. What are the latest trends, developments and innovations in this sector? The latest developments speak to the digitalisation revolution that we are experiencing. We have seen robo-advisors developing in the past few years to such an extent that a definition had to be written into FAIS regulations (BN 194 Automated Advice). Advisors and planners are increasingly making use of technology to improve their practices and relationships with their clients. More and more, clients prefer to meet online via platforms such as Zoom, MS Teams and Skype. The pandemic has accelerated the development of digital strategies within the industry. This led to the need for skills development in the use of technology, understanding AI and its risks as well as behavioural finance. Please share the FPI’s recent milestones and celebrations. Milestones: The FPI celebrated the launch of our first integrated report since adopting the King IV principles. We increased our social media following and digitalised our FPIMYMONEY123 programme to ensure that consumer education would still continue throughout the lockdown levels when face-to-face numbers were restricted. The FPI is involved in setting a national consumer education curriculum at regulatory level and continues to be involved in ongoing discussions around incoming regulations. The FPI had a fantastic virtual professional conference in 2020 and will have another one in 2021. We took our PCE, which has always been a face-to-face exam, completely online by incorporating AI and learning management systems to ensure security. Celebrations: The FPI achieved good results despite 2020. We met all our targets and managed to keep costs down. We are also turning 40 years old this year! One of the FPI’s missions is to provide financial planning for all. How can the FPI grow the pro-bono programme so that it provides advice to all South Africans? We need more of the FPI’s professional members to give back to the community by participating in the pro-bono programme. Members can claim CPD hours for the pro-bono work they do. Access to advice and financial inclusion are quite high on the agenda of FPI as well as the regulators. We need to make it easier for all South Africans to have access to advice. It would be great if a tax incentive, such as a tax deduction for paying for advice/fringe benefit see the light of day. We also need corporate South Africa, especially the FPI corporate partners, to contribute financially to the profession via sponsorships that will enable us to do so much more with our consumer education outreach and financial literacy programmes, which are available at no cost to the public. How does the current pro-bono scheme work? The FPI developed the material needed for members to present the FPIMyMoney123 programme to a group of people. Members of the public, schools, churches and employers, etc that want the FPI to present the programme can visit to book a session with a professional in their area. The FPI professional members that present FPIMyMoney123 may claim CPD points. In 2021, the FPI celebrates 40 years of financial planning experience. What does this mean to you personally? Confirmation that the FPI is part of the greater global community when it comes to the financial planning profession. It also means we are a professional body that the members can be extremely proud of. We have reached many milestones over the past 40 years. For me personally, it means that we are an agile, young but robust profession that has so much more to give back to the public at large as well as being involved in the career journeys of young upcoming professionals. In the 1980s, the FPI’s focus was solely on professionality in the industry. What is the FPI’s focus now? In the 1980s, the FPI as it stands today, did not exist. The FPI those days was called the Institute for Life and Pension Advisors (ILPA) and focused predominantly on the life and pension space. When we became the FPI we started to focus more on advice-led activities. We participated in the global job analysis survey earlier this year and will soon be updating our competency framework and curriculum to include learning outcomes that include financial planning technology and behavioural finance. Our focus is on the professionalisation of the industry at large, especially the financial planning profession. This will remain our focus for as long as we have consumers that make use of the financial advice and planning services delivered by our professional members. Please share with us, the importance of the FPI’s strategy and vision of “Professional financial planning and advice for all”, against the backdrop of our current disruptive world. Professional financial advice and planning go together. It is not possible to separate the one from the other. It is of critical importance that the FPI, as the standard setter of financial planning and professional financial advice, continues to set relevant standards for the profession in the face of the current disruptive world, always taking our members into consideration. Since the start of the global pandemic, people lost their jobs, or had to take salary cuts. Families have lost loved ones, often with no valid will or life insurance in place, sometimes not even a funeral policy. The current times that we live in have no doubt reconfirmed the FPI’s vision and highlighted the critical importance of speaking to a professional financial advisor. People can visit to find a FPI professional member in their region. 23

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