John Collett has uncovered a sad truth about the Financial Planning industry in his article "Minimum training for planners is not enough".
The Diploma of Financial Planning, which you are required to complete to be a licensed Financial Planner, is quite frankly a joke. It requires the completion of 4 modules. Each of these modules require completion of an assignment and an exam. The assignments are rarely updated, and therefore plagiarism is rife. The assignment requires completion of an open book multiple choice test. Yes that's right, open book AND multiple choice! This is often likened to a game of hide and seek, the answers are there, you just have to find them.
After completion of a University Degree, I was amazed the requirements to be a Financial Planner were so minimal, and after doing this course (which can be fast tracked in about a week), you are legally able to tell people how to invest their life savings! I can honestly comment that the Diploma of Financial Planning did teach me very little and most of my skills came from other avenues, including a 3 year University degree (whilst it wasn't in the financial planning field, it was heavily biased towards Economics and Finance which made it easy to apply Financial Planning knowledge), as well as learning as I went. The diploma also fails to attack real life scenarios, with its examples all based around the all too perfect 'client'.
The Financial Planning Association is working hard to promote the Certified Financial Planner (CFP) qualification. From now on to enrol to the CFP program you must hold a relevant University Degree, however grandfathering means that anyone who was advising in the 90' and early 00's was automatically granted CFP status after 3 years advising. Whats more, a CFP has exactly the same rights as a regular Financial Planner, so there isn't huge motivation to become a CFP.
I'm not saying you should avoid advice. Financial Advice is important, however, suss out your adviser. I'm not saying they require a uni degree or CFP, some of the best advisers I know have neither. Talk generally about the economy, financial markets and current affairs in finance. If you're a good judge of character you will soon work out if your adviser is the real deal!
The industry to be taken seriously, must get serious about making it tougher for Financial Planners to get qualified. It is an industry that is already tainted, and does not need any more bad publicity. Until then we will remain the laughing stock of our professional peers.
Monday, February 26, 2007
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