On Monday we shared with you our Declaration of Independence. As Christmas approaches, we share with our wonderful clients and friends of Quantum Financial the 12 Days of Independence. On the second day of independence, we explain why independence is not enough.
The concept of independence has a long and proud history.
If we go back 2,500 years to 500 BC, the Romans gained their independence from the Etruscans, abandoned their monarchy, and set up a Republic based on an elected Senate.
Jump forward 2,276 years to 1776 and the 13 American colonies declared themselves independent from Britain. As a later politician put it 87 years later, it was “a new nation conceived in liberty, and dedicated to the proposition that all men are created equal” (Abraham Lincoln).
Today independence is at the core of how Australian consumers expect professional financial planners to act. Consumers should expect their advisors to exercise their independent judgment free from conflict given only in the clients’ best interests.
However, while independence is essential to professionalism, by its own it is simply not enough.
There are a number of other key attributes that are equally essential for true professionalism:
- You must be a member of a professional body that adheres to ethical standards
- The profession meets a minimum standard of educational standards (at degree level)
- The profession holds a globally recognised professional qualification (the Certified Financial Planner qualification)
For instance, the minimum entry level to financial advising is currently set at diploma level. Effectively, anyone who leaves school in Year 10, qualifies via an 8 week hot house diploma level course could immediately hold themselves out as an independent financial planner.
They can do so despite the fact they hold no professional qualification, no basic degree, and are not a member of a recognised professional body. All they need to do is not accept commissions and not be tied to a financial institution. So you are right to be wary.
We expect doctors, accountants, lawyers and other professionals to hold a degree, hold a professional qualification, abide by an agreed code of ethics and to be a member of a professional body.
‘Libertatem non sufficit’
Independence without a level of education, a professional qualification and adherence to ethical standards is not in your best interests.
You wouldn’t dream of allowing a supposedly independent quack who didn’t hold a degree or a professional medical qualification or wasn’t a member of a recognised medical association near your ill child.
You should have the exact same attitude with your personal finances.
We commend advisors who go on to obtain specialisations such as in insurance and in Self Managed Super Funds once they have completed the CFP professional qualification, but we do not consider these specialisations a substitute for the CFP.
So, if you are seeking a professional, independent financial planner, ensure:
- They are legally independent
- They hold a degree
- They hold the CFP (Certified Financial Planner) professional designation
- They abide by a code of ethics
- They are a member of a recognised professional body (Financial Planning Association, Institute of Chartered Accountants or CPA Australia)
Quantum Financial clients have the confidence that this is exactly what they are receiving and you should never settle for less.