Compulsory Membership of Professional Associations?

Should financial planners/advisers be made to join a professional association in order to be able to provide professional financial advice to consumers?

  • No (52%)
  • Yes (47%)
  • Not Sure (1%)

Our latest adviser poll considers the question of compulsory membership of professional bodies, an issue that has floated to the surface as a result of the Parliamentary Joint Committee Inquiry into Financial Products and Services.

Our latest poll asks:

Should financial planners/advisers be made to join a professional association in order to be able to provide professional financial advice to consumers?

The call for mandatory membership of financial planners to an appropriate porfessional body is being made by both the Association of Financial Advisers (AFA) and the Financial Planning Association of Australia (FPA).

This joint call from the two Associations is motivated by a desire to lift both the professional standards and public perception of the financial advice industry in Australia.

FPA CEO, Jo-Anne Bloch, pointed out to riskinfo that the issue of compulsory membership of a professional association is part of a broader strategy that includes restricting the use of the term ‘financial planner’ as well as raising the minimum educational requirements above those required by law for anyone wishing to offer professional financial advice.

As part of these requirements, Ms Bloch and the FPA believe that any financial advisers wishing to operate at these standards must also be a member of an appropriate professional body, and one whose charter of educational standards and conduct must be accredited by ASIC.

AFA CEO, Richard Klipin, reflected the attitude expressed by the FPA, pointing to other professions whose practitioners are required to be members of an industry association (eg doctors, lawyers) in order to be recognised by their clients as individuals who have met the industry standards of competency and conduct required to give them the confidence they need to rely on the service or advice being provided.

On the other hand, some advisers have previously expressed dissatisfaction with one or both Associations, at least in their current format, and may prefer to aspire to high levels of education and quality of advice without necessarily being required to join one of their industry associations.

So, in addressing the question of compulsory membership of an association, there must also be consideration given to the nature of the association itself and the standards it requires and/or the standards that ASIC may stipulate in the future, if compulsory association membership for financial planners is introduced.

It’s over to you.  Make your voice heard.  Have your say.

15 Responses to Compulsory Membership of Professional Associations?

  1. Peter Hartnell August 12, 2009 at 12:40 pm #

    Advisors who specialise in risk are doing themselves a disservice if they are not members of the AFA, because it is the only association which has the risk specialist’s interests in mind.

  2. Greg August 12, 2009 at 12:50 pm #

    Here’s a scenario to consider re membership dues. What if you only paid them in a year when you ‘felt’ that you needed some assistance from the particular association and you ‘think’ that amount paid is justified. That would be akin to the FPA’s stance on commissions in super (amongst other things), where they think you should only get income from a client when they felt that they needed advice or assistance in a particular year and were willing to pay for it. I don’t think many associations or trade unions would stay in business very long if such a model was adopted, yet that it the model the FPA propose for us. And now they want to force me to join them?

  3. Kevin Weaver August 12, 2009 at 12:56 pm #

    I am a member of the AFA, however to make membership compulsory of a professional organisation can be counter productive. I have met many advisers who would like notto be a member of their current professional body because they will loose the CFP status.

  4. Mark August 12, 2009 at 12:56 pm #

    My question is – what exactly is the FPA or AFA going to do for me as an individual adviser and business owner? By joining either of these bodies, I am simply paying for the “honour” of including this in my marketing material. We also have to pay to attend their so called roadshows. What’s next – compulsory attendance to their National Conference in addition to the compulsory PD days and conferences demanded by our dealer groups?

    I have studied well above the basic PS146 requirement (through the FPA, was a member and couldn’t see how this helped me) and comply with CPD rules and then some every year. If ASIC is that concerned about the quality of advice being provided then they should implement a higher standard and not do things like allowing super funds to give “basic financial advice”.

    Based on their current fee structures for what they offer, if the AFA & FPA were to get their way, they should be able to offer much lower member fees. I bet this wouldn’t happen.

    We are regulated by the government quite enough already. I can’t see that compulsory membership will have any effect in fixing any of the hard issues that exist in our industry.

  5. ken August 12, 2009 at 12:59 pm #

    i dont object to being a member of a proffeswsional body and think that you should be a member of at least one only. to retain CFP status i do not think that you have to be a member of the FPA, it should not be relevant

  6. tony brissett August 12, 2009 at 1:10 pm #

    I’ve been a member of both the FPA, and am currently a member of ‘The Institute’ (Australian and New Zealand Institute of Insurance and Finance), and don’t believe I’ve benefited professionally from either association.

    I’m a subscriber to Kaplan Learning, firstly to satisfy my ongoing training, but secondly, because they ‘target’ my learning, with very educational, and interesting articles with follow-up Q&A’s. My further development, is far better satisfied by my association with Kaplan, than membership to any of these bodies.

  7. Ed August 12, 2009 at 1:14 pm #

    This is one of the biggest jokes I have ever heard. Why does being a member of one of these Associations mean my advice is any better than it was before? The only reason the FPA and AFA are pushing this is so they can increase their revenues. What value do I really get out of being a member? All their PD days and conferences are is a Product Flog.

  8. Len Proctor August 12, 2009 at 1:36 pm #

    I thought compulsory unionism was dead! Surely people should not be forced to join an association of any kind, particularly if they do not agree with the principles of that organisation. Is this just another money grab by the FPA and AFA in disguise?

  9. Debbie August 12, 2009 at 3:00 pm #

    There are some people in our industrty that do the wrong thing. The idea of being caught and going to jail doesn’t stop them now, so having compulsory membership to the AFA or FPA is hardly going to stop them either.
    The only thing that will make any difference is education, as it may stop some ‘sharks’ from entering the industry in the first place.

  10. Kenm August 12, 2009 at 3:46 pm #

    I think that previous commentators have missed the point. The current state of associations is not all that relevant. What is relevant is the perception of existing and importantly, future clients. Clients are interested to know that the advisers they engage are honest, ethical and competent and two methods for assessing those qualities are 1. personal referrals and 2. membership to an organization that has a code of ethics.
    Whether or not the AFA or FPA has served members well in the past is irrelevant. The important question is whether the bodies (the accountants have two bodies – the Chartered Institute and the Society of Accountants)can be shaped to fit the purposes of the members and the expectations of general public. That is normally an evolutionary process that needs some guidance.
    The important aspect now is that financial planners grasp the opportunity now presented to morph their industry into businesses that offer value for planners as well as current and future clients.

  11. DG August 12, 2009 at 4:38 pm #

    Compulsory membership of a professional organisation should be matched by the raising of minimum standards to be part of the organisation. It should be a badge of professionalism that is not based on the lowest common denominator.

  12. Jeff Chignell August 12, 2009 at 6:57 pm #

    I am a current member of the FPA but won’t be renewing my membership.
    I believe I have the right to decide if I want to be part of an organization or not & based on what I have seen of the FPA over the last 12 months, they are only catering to a small group of select advisers, not the average one who deals mostly with “mums and dads” not the rich and famous.

    I thought compulsory unionism was banned?????
    Also if every adviser had to join, will the fees become cheaper- based on past history very doubtful.

  13. Wayne Norris August 12, 2009 at 10:02 pm #

    Financial membership of an association makes for a rich association, and not necessarily high ethics of membership, or otherwise.
    The FPA is being soured by Accountants trying to be Financial Planners, and also is bowing to Industry Super Funds, which do not need to comply with regulation forced upon Mum and Dad Advisers.

  14. Glenn B the risk writer August 27, 2009 at 3:33 pm #

    Guys,
    education is the key advanced dip FS at least and/or degree.
    If you do have the ADFS no advising role -period.
    I have joined the AFA for peer network reasons only.
    Happy risk writing.
    cheers
    Glenn

  15. Wary consumer September 15, 2009 at 10:14 am #

    For the consumers of financial advice, it is very hard to assess the merits of one financial planner from another. As a consumer, I would like to assess the performance of an FP on some objective measures before I sign up to buy advice. Would membership provide any information to help me make this decision?

Leave a Reply