Our latest poll is asking all advisers to consider whether their own best interests will be served if the term ‘financial adviser’ becomes a legally-defined term. Our question is:
Do you support the term ‘Financial Planner/Adviser’ being enshrined into law?
There is a clear logic associated with the value of enshrining the term ‘financial planner’ and/or ‘financial adviser’ into law. It will assist in protecting consumers from receiving financial advice from those who are not qualified to hold this significant responsibility. Yet, there are counter arguments that also need to be considered, which relate to the potential of all eligible ‘financial advisers’ being tagged, in the mind of the consumer, with a negative perception, based on well-documented advice failures of the recent and distant past.
Tony Vidler, Chairman of New Zealand’s Institute of Financial Advisers, said that advisers who represented themselves by a commonly-known title, such as ‘financial adviser’, could find this to be detrimental to their business, because it can deter potential clients.
Speaking to attendees at the recent AdviserEdge Social Advice Summit, Mr Vidler said clients immediately associated the words ‘financial planner/adviser’ with what they read in the mainstream media, which was generally quite negative.
I see the use of generic titles as a huge mistake for the industry
“I see the use of generic titles as a huge mistake for the industry,” said Mr Vidler, who added that consumers may have already formed a negative opinion on what that title means, and the message it conveys.
The two sides of the argument are clear: enshrine the term ‘financial planner/adviser’ into law in order to better protect the consumer and enhance the path to professionalism for all financial advisers; or step away from associating with a term that, at least for the time being, generates an often negative perception in the minds of the public.
Where do you stand on this question? Tell us what you think…
Like all professional services providers, a clear, definitive, law enshrined term for financial planner or financial adviser would best serve the interests of protecting consumers and enhancing the quality of advice. It is currently far too easy for someone to qualify as an Auth Rep and be entitled a financial planner, the bar needs to be lifted, and CFP is the closest we have currently to this. Moreover there are organisations purporting to provide wholistic wealth advice when in fact they are pushing one particular product (usually resi property). I think it is imperative for the success of the financial advice industry that the term is properly enshrined, like a lawyer or doctor that provides advice not everyone can easily qualify to be one or deceive the public into thinking they are one.
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