Advice clients rarely, if ever, ask about adviser designations
Financial planning clients rarely, if ever, ask about adviser designations such as the Financial Planning Association’s (FPA’s) Certified Financial Planner (CFP), according to the Association of Independently Owned Financial Professionals (AIOFP) but it is promoting its own designation anyway.
In doing so, the AIOFP has upgraded its own Certified Financial Strategist (CFS) which it is promoting as being based on an adviser’s experience rather than being almost entirely focused on education.
As well, the AIOFP is promoting the designation as being transferrable if advisers leave AIOFP membership and has signalled that new establishment and annual fee arrangements will be announced at the AIOFP annual conference.
The caveat with respect to advisers leaving the AIOFP and using the designation is that is that “you will not be able to participate in new client opportunities if you depart”.
AIOFP executive director, Peter Johnston said his organisation’s CFP designation could be considered a “consumer designation; because it is “is not just about tertiary education, it’s about experience, eliminating conflicts and mitigating risk for consumers”.
“Over the past 20 years we have regularly asked members if any clients have ever enquired into whether they have a degree or are a CFS or CFP…..not one has ever asked!” Johnston said in a message to members. “This really begs the question about the relevance of designations.”
A brochure developed to promote the CFS designation states that it will be certified by the AIOFP Compliance Board committee – a panel comprising highly experienced current and former Advisers”.
The AIOFP said the designation would entail five “foundation tenets” that consumers should be looking for when selecting an adviser.
- Independently owned
- Capable research, compliance and PI facilities
- ASX and Industry Super Fund trained
- Maximum of three years practical experience
- Relevant qualifications.
WHY CAPABLE RESEARCH, COMPLIANCE AND PI INSURANCE?
Capable research is the most important aspect of an Adviser’s service, if it is inefficient, clients are exposed to the real potential of product failure and capital loss. We ensure the Adviser has mitigated the inherent conflicts that can occur with the research rating process.
A capable in-house compliance service is fundamental to operating a professional practice, this will give consumers confidence the Adviser complies with the law and will be around for a long term professional relationship.
WHY RELEVANT TERTIARY QUALIFICATIONS?
Having a strong relevant education base is an important prerequisite to a professional Adviser’s characteristics. A CFS Adviser must demonstrate their relevant experience and qualifications that exceed industry standards.
WHY 3 YEARS EXPERIENCE?
Hands on experience dealing directly with client portfolios are obviously critical to ensure professional advice is delivered. Three years’ experience is considered a minimum prerequisite.
PEACE OF MIND.
A CFS Adviser will give consumers confidence they are dealing with a person who has eliminated all conflicts of interest in the advice process and will be acting in their best interests at all times in all circumstances.
A CFS Adviser embodies all the professional characteristics an Adviser should possess to deliver quality professional advice to consumers on a fee for service basis.
So the tertiary education level will align with that required to remain a financial adviser past 2026? Somehow I’m guessing not? What then would be the point?
FPA has always been hamstrung in properly promoting CFP as a higher standard, because it disgracefully still allows “grandfathers” who have never met those higher standards to call themselves CFPs. This has devalued the real CFP and left the door ajar for others to compete with similar sounding experience based designations. The FPA executives who aggressively defend the indefensible grandfathered CFP should be ashamed of themselves. Hopefully a merger with AFA will lead to greater integrity in the CFP designation and the new association’s leadership.
Advisers become CFPs and FChFPs for their own reasons and not to impress clients. I’ve been an adviser for 25 years and not once has a prospective client asked me if I’m a CFP, let alone declined to seek advice from me based on the negative.
Most client’s are concerned about the quality of advice and, to some extent, the protections afforded by my qualifications and experience.