Views
4 years ago

Blue Chip Journal - January 2020 edition

  • Text
  • Invest
  • January
  • Metropolitan
  • Portfolio
  • Managers
  • Funds
  • Portfolios
  • Global
  • Investors
  • Advisor
  • Asset
  • Advisors

FPI Financial planning

FPI Financial planning as a profession An overview after 50 years of financial planning in SA On 12 December, 1969, 13 men met in Chicago and outlined the first steps needed to establish these integrated practices as a new profession called financial planning. In this 50th anniversary year of the profession, we will examine how the profession is doing in South Africa. Characteristics of a profession At the FPI convention in 2007, the late Charles Pillay, who was at that time the Ombud for Financial Service Providers, presented on the state of the profession. In his presentation, he highlighted the characteristics of a profession to be: • A specialised and well-defined body of knowledge; • Membership of a professional association acting as a spokesperson for the profession; • Devotion to public service; • A code of ethics; and • Status is recognised by the community you serve. We will examine these in more detail below. A specialised and well-defined body of knowledge The development of professional qualifications in the financial industry in South Africa is led by several roleplayers, one of which is the Financial Planning Institute of Southern Africa (FPI). The education standards are set in FPI’s Financial Planner Competency Profile and Financial Planner Curriculum Framework. FPI’s standards are benchmarked against Financial Planning Standards Board’s (FPSB) standards and localised to the South African territory. It is against these standards that FPI, as an affiliate of FPSB and recognised SAQA professional body, recognises the qualifications of education providers within South Africa. The recognition indicates that the qualification as developed by the education provider meets the professional standards as set by FPI. From a humble beginning of one education provider, there are now six education providers who provide a qualification recognised against the Financial Planner competency profile. Membership of a professional association acting as a spokesperson for the profession FPI originally started out as the Institute of Life and Pension Advisors (ILPA) within the life insurance industry. ILPA was formed through engagements between the Life Offices Association (LOA); the Life Underwriters Association of South Africa (LUASA); the Institute for Pension Consultants and Administrators 34 www.bluechipjournal.co.za

(IPCA); and the South African Insurance Brokers Association (SAIBA). In May 1980, discussions began between these parties on the need to develop a professional qualification for the life insurance industry. The parties felt that the academic level for financial planners should be at a university level, and that the qualification must have a combination of academic as well as practical components. Years later, in 1996, it was agreed that there was a need to professionalise financial planning and to recognise ILPA’s qualifications internationally. It also became clear that there was a pathway needed to raise professional standards, as there was no longer just a focus on life and pension advisors, but holistic financial planning that included retirement planning, risk planning, as well as other disciplines such as estate planning and investment planning. When ILPA was authorised to grant the CERTIFIED FINANCIAL PLANNER® designation in South Africa in 1998, the institute started drawing a much wider range of industry players that included lawyers, accountants, actuaries and employee benefits advisors; financial planning was in the process of becoming a profession. A name change was needed as the institute no longer just dealt with Life and Pension funds. The name of ILPA was subsequently officially changed to the Financial Planning Institute of Southern Africa in March 2000. Today FPI is recognised as a professional body under the National Qualifications Framework Act and represents its professional members to government, the industry and consumers. Devotion to public service In FPI’s 2010 paper “Skills-Based Volunteering – the mark of True Professionalism”, we observed that our country remains beset by poverty and suffers the dubious reputation of having a virtually non-existent savings culture. But all is certainly not lost. As professional financial planners, we are in the privileged position of being able to make a real and lasting positive difference in the lives and futures of so many of our people – simply by being willing to freely give of our time, talents and knowledge for the benefit of others. These sentiments still hold true today and since 2012, as a profession, through our volunteer members, we have touched countless lives with the FPIMYMONEY123 programmes, which is a combination of a workshop and one-on-one consultations. In addition to the pro bono work, the first principle in the FPI Code of Ethics and Professional Responsibility is Client First. Placing the client’s interests first is a hallmark of professionalism and is a core value of any profession. It requires FPI members to act honestly at all times and not place personal interest or advantage, in any form, before their clients’ interests. A code of ethics Professions play an important role in ensuring an ordered society. As such, a profession will publish a code of ethics to protect its clients and society at large by guiding its members to conduct themselves ethically. This contributes to the reputation and credibility of the profession and its members. It also guarantees sustainable development of the profession. The FPI Code of Ethics is intended to promote ethical behaviour and prevent unethical behaviour by its members. The guidelines provided in the code instil confidence in members by providing them with clear conduct boundaries. The code also stimulates ethical awareness and decision-making. Status is recognised by the community you serve As seen above, most of the characteristics of a profession are firmly entrenched in the financial planning industry in South Africa. As with any young profession, the public recognition is still one area that needs some focus. We do believe that one of the elements to support this recognition is legal protection. As long as anybody is allowed to call themselves a financial planner, whether they meet the professional requirements or not, the consumer will remain confused about what a financial planner is, and the professional will be painted with the same brush as a non-professional. This will hopefully change soon. In the December 2019 Adviser Categorisation paper, the FSCA proposed that the title of financial planner for individuals become a professional designation. The CFP® designation was recognised as a standard for this. Conclusion In a short period of 50 years, financial planning has come a long way in becoming a profession, with many of the characteristics already being met. I, for one, am excited for the next 50 years in this profession. David Kop CFP®, Executive Director of Relevance, FPI www.bluechipjournal.co.za 35

Other recent publications by Global Africa Network: