This information is provided by Dr. Greg Nazvanov one of the Australia’s 10 best financial advisers who was interviewed by Careerbright for information on career in Financial Planning. Read the complete interview here.
In Australia, the financial planning services are initially delineated by law by the granting of licence to deal in securities or advise on investments. Licences are issued under stringent criteria by the Australian Securities and Investments Commission (ASIC), which has evolved these regulations vigorously over the years. Financial planning is now a highly regulated industry in Australia especially where financial advice to the public is involved. Practitioners who offer advice that could influence a client’s decision to purchase a financial product must meet minimum training requirements and be licensed by the ASIC. The meaning of ‘licenced’ refers to Australian Financial Services Licence (AFSL) holders and representatives or authorised representatives of licence holders. Broadly, most people embarking in financial planning will start as an authorised representative of a licence holder.
Becoming a financial planner in Australia involves two main steps:
- Meet the training requirements of Regulation Guideline 146;
- Select a licence holder with whom to be affiliated.
The licence holder is the authorised representative, and will be ultimately responsible for the advice given by the planner. The licence holder therefore must make sure the representatives meet all compliance and training prerequisites. As of November 2005, there were approximately 4,300 licence holders registered with ASIC and over 42,500 authorised representatives in Australia.
The first country to introduce legislation that requires a person to be licensed before he can hold himself out to be a ‘financial planner’ is Malaysia. Financial planning is considered a newer profession in the Asian region as compared to those in the west, such as the United States and Australia where the profession is more established. The Securities Commission (SC) of Malaysia introduced legislation through amendments made to the Securities Industry Act in 2003 to regulate financial planning and the use of the title or related-title of ‘financial planner’ or to conduct activities related to financial planning
In 2005, amendments to the Malaysian Insurance Act require those who carry out financial advisory business (including financial planning activities related to insurance) and/or use the title of financial adviser under their firm (which, like in Singapore, must be a corporate structure) to obtain a licence from Bank Negara Malaysia (BNM).Some persons who offer financial advisory services, e.g. licenced life insurance agents, are exempted from licensing as a practising requirement.
Again, in 2007, the Capital Market Services Act (CMSA) comes into force as another of the consolidation exercises of the government to move the industry towards a one regime regulatory environment.
As it currently stands, one of the basic requirements to apply for a financial planner or financial adviser licence in Malaysia is that the key company officers, e.g. directors, must be an RFP designee (most if not all Malaysian FChFP designees also carry the RFP designation). Subsequently, in September 2006, the CFP qualification is included as one of the alternatives that can be used by the financial adviser licence applicant. With this development, the demand for financial planning courses has begun to take root in more concrete forms in Malaysia. The licence applicant must also be a member of a self-regulatory organisation (SRO) in financial planning recognised by the authorities. For this purpose, the two SROs currently recognised by both the Security Commission and Bank Negara are the Malaysia Financial Planning Council (MFPC) and the Financial Planning Association of Malaysia (FPAM). The purpose of this requirement is to ensure some form of self-supervision for persons practicing financial planning.
USA and Other countries
In some countries, e.g., the United States, financial planners must be registered as an investment advisor first. This requires an employee within a firm to pass the series 65 or 66 Registered Investment Advisor Exam. A private advisor or company can apply to the state and SEC for an RIA Registered Investment Advisor License or Status.
Being ‘licensed’ to practice financial planning is not the same as merely having a professional ‘qualification’ in financial planning. A person may be professionally qualified in financial planning, but without a licence required by the law, he cannot practice the trade in that country or call himself a financial planner there. As of now, there are quite a bit of qualifications related to financial planning that can be found in world. The most prestigious financial planning designations are those which are not just of advanced standing and well-known, but are also recognised by the relevant authorities for licensing purpose.
In some places, individual employees within a licensed & registered Investment Advisor firm such as a: brokerage, bank or insurance company may be exempt if providing complementary financial planning services in relation to their existing products and services. Moreover, financial planners should be extremely careful in providing estate planning or taxation advice for a fee, as these fields are highly regulated by government agencies that control the practice of lawyers and Certified Public Accountants (CPAs). The term “Investment Advisor” also includes any person who uses the title “financial planner” and who, for compensation, engages in the business, whether principally or as part of another business, of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as part of a regular business, publishes analyses or reports concerning securities.
From the California Department of Corporations
A financial planner will be registered with the state if he or she has less than $25 million in assets under management (AUM), and with the SEC if he or she has more than $30 million in AUM. The planner is required to present a client with the ADV Part II or equivalent before the client enters into a contract with the planner. No certification, tests or training ensure that any planner is suitable for the client or any investor, and it is important to read the ADV Part II, interview them, and fully understand any contract.
History of certifications in financial planning across the globe
In a newly emerging profession such as financial planning, there is a lack of regulation, especially in the early years of development. The need for some forms of self-regulation and the demand that a financial planner be competent and trustworthy have prompted several independent financial services organizations to introduce certifications and ethical benchmarks to meet these challenges in accordance to the need in each country. Those who meet the requirement of the certification process and ethical standards will be awarded a professional financial planning designation.
One of the oldest, best-known financial planning certification trademarks is the CERTIFIED FINANCIAL PLANNER certification, which has gained global recognition because of its active standard setting activities and worldwide presence. CFP certification was first introduced in the United States in the early 1970s to meet the need of the consumers. CFP Board, based in Washington, D.C. owns the CFP marks within the United States. The CFP marks are owned outside of the United States by Financial Planning Standards Board, a non-profit standards-setting body based in Denver, Colorado.
CFP Board was founded in July 1985 as the International Board of Standards and Practices for Certified Financial Planners, Inc., (IBCFP) by the College for Financial Planning (College) and the Institute of Certified Financial Planners (ICFP). The IBCFP became Certified Financial Planner Board of Standards Inc. (CFP Board) on February 1, 1994. As a professional regulatory organization acting in the public interest by fostering professional standards in personal financial planning, the CFP Board establishes and enforces education, examination, experience and ethics requirements for CFP certificants. The CFP service mark is promoted world-wide through member associations, the FPAs.
The Fellow Chartered Financial Practitioner (FChFP) designation was developed by the National Association of Malaysian Life Insurance and Financial Advisors] (NAMLIFA) in 1996. The designation was adopted by the Asia Pacific Financial Services Association (APFinSA) in 2001 as the unified designation for its member associations in 11 countries.
The Registered Financial Planners Institute (RFPI) formed in 1983 in the United States to promote professionalism among those who are or will be active in the field of financial planning for individuals and businesses. The RFPI is an international organization with chapters and members throughout the world. The RFPI offers study programs both in classroom conducted seminars and correspondence courses. RFPI is a collective membership of financial planners and is designed to serve the interest of both its members and the general public in matters relating to financial planning. RFPI recognizes qualified individuals by designation of RFP, SRFP who are in the field of financial planning which would include: insurance, attorneys, real estate, bankers, CPAs, stock brokers, securities or other professionals licensed in similar fields that have the ability to properly financial plan individuals or businesses in their related fields. In a separate development, the Malaysian Financial Planning Council, incidently also introduced a professional designation for financial planners called Registered Financial Planner (RFP) in 2004, which was recognised by the regulatory bodies, Bank Negara and Securities Commission in the country for the purpose of licensing financial planner.
The Personal Financial Specialist (PFS) credential was established for CPAs in the United States who specialize in personal financial planning. The credential is awarded exclusively to members of the American Institute of Certified Public Accountants (AICPA) who have demonstrated considerable experience and expertise in that area. As of today, the AICPA has granted approximately 3,300 CPA/PFS credentials.
In Australia, the financial planning specialisation, CPA (FPS), is available to those members of CPA Australia who can demonstrate their eligibility through experience and education within the financial services industry.
The objectives of the FPS designation are to:
- achieve public recognition for those who hold the specialisation;
- enhance the quality of financial planning services that members provide; and
- increase practice development and career opportunities for CPAs.
The FPS designation is available to CPAs, and is based on a points system, where a minimum of 100 points must be accrued. Although all CPA Australia members who provide financial product advice must be licensed by ASIC, a member does not have to be licensed to first obtain the CPA (FPS) designation.
The Chartered Financial Consultant (ChFC) is another financial planning qualification, conferred by The American College. To date, more than 41,000 individuals have attained this distinction. This designation has also spread to Asia, where designees are found in countries like Singapore, Malaysia, Indonesia, China and Hong Kong.
In Europe, the €uropean Financial Planner (€FP) designation conferred by the €uropean Financial Planning Association (€FPA) is gaining ground as a financial planning certification mark. The €FPA is the largest professional and educational organisation for financial planners and financial advisors in Europe and is the only Financial Planning Association created solely in the interest of European financial planning consumers and practitioners.
Globally the Chartered Wealth Manager (CWM) is one of the fastest growing financial planner specializations which focuses on developing critical relationship management skills for financial planners and advisors. The designation is conferred by the Board of Standards of the American Academy of Financial Management in 145 countries.
The rest of the certification qualifications related to financial planning include: Fellow, Financial Services Institute (conferred by LOMA, USA; the Certified Private Banker designation (conferred by the American Academy of Financial Management); the Certified Financial Marketing Consultant (CFMC) conferred by the Institute of Marketing Malaysia.
Accredited business school, training centers and other providers
Globally, cross-recognition agreements are being developed to facilitate the learning of financial planning. The 2 major accrediting agencies, the Association to Advance Collegiate Schools of Business (AACSB) and the Association of Collegiate Business Schools and Programs (ACBSP), which accredit over 560 of the best business school programs, provide the Certification of MFP Master Financial Planner Professional from the American Academy of Financial Management, which is available to AACSB and ACBSP business school graduates with finance or financial services related concentrations.
|CERTIFIED FINANCIAL PLANNER™, CFP® and the Mark are the global symbol of excellence in financial planning.CFP practitioners have completed rigorous study in financial planning, have extensive industry experience and abide by the FPA Code of Ethics and Rules of Professional Conduct.
The CFP Marks are owned outside the United States by the Financial Planning Standards Board (FPSB). In 1990, the Financial Planning Association of Australia (FPA) became the first international organisation to be licensed to award CFP certification. FPA is the sole certification authority in Australia.
Financial Planning Standards Board (FPSB)
A non-profit, international standards-setting body, FPSB’s mission is to benefit the global community by establishing, upholding and promoting worldwide professional standards in financial planning. Its commitment to excellence is represented by the CFP and CERTIFIED FINANCIAL PLANNER Marks.
FPSB serves the needs of global consumers by establishing, maintaining and enforcing consistent, high level standards for the affiliates that currently administer the CFP Certification Program around the world.
FPSB is governed by a nine-member board of directors and has an advisory council made up of representatives from the 17 organisations offering CFP certification internationally (FPSB Affiliates) and two organisations in the process of becoming FPSB Affiliates. Currently, the Chair and a director of the FPSB Board are Australian.
FPSB Affiliates have authorised more than 102,000 individuals to use the CFP Marks worldwide. Each organisation has endorsed the CERTIFIED FINANCIAL PLANNER certification process as the best means of demonstrating financial planner competency and ethical behaviour. Members of the Council work to promote the CFP certification marks as the global symbol of excellence in financial planning.
More information on the FPSB can be viewed at www.fpsb.org
CERTIFIED FINANCIAL PLANNERTM, CFP® and the Mark are international marks representing the highest professional certification that can be awarded to a financial planner. CFP practitioners have completed rigorous study in financial planning, have extensive industry experience and abide by the FPA Code of Ethics and Rules of Professional Conduct.
See the video below that brings to life the CFP Marks that represent the global symbol of excellence in financial planning.
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- The four Es
- Education and examination
- Download Pathway to CFP® certification brochure
- Download Guide to CFP® certification
The four Es
Education and examination
To meet the education and examination requirements for CFP® certification candidates are required to successfully complete the CFP Certification Program consisting of five units.
CFP Certification Program
The CFP Certification Program is specifically designed to meet the education and competency standards for the internationally recognised designation, Certified Financial Planner. The CFP Certification Program consists of five units:
- CFP1 Ethics professionalism and compliance
- CFP2 Applied Strategies 1
- CFP3 Applied Strategies 2
- CFP4 Investment Strategies
- CFP5 Certification Assessment
Pre-requisites for entry
- Current individual membership of the FPA
- Twelve months appropriate relevant experience, Candidates who do not hold Authorisation with an AFS Licensee must submit their Record of Experience for verification by the FPA before enrolment will be approved
- One of the following education pathways:
a. Approved bachelor’s degree, master’s degree or higher in financial planning;
b. Bachelor’s degree, master’s degree or higher in a finance-related discipline that has been assessed by the FPA for entry;
c. Bachelor’s degree, master’s degree or higher in a non-finance-related discipline PLUS Advanced Diploma of Financial Services (Financial Planning) or FPA Diploma of Financial Planning.