Future of Financial Planning

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Future of Financial Planning

• Gerhardt Meyer, CFP
• Phil Billingham, CFP
• Wessel Oosthuizen, CFP

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• What we will talk about
• real quick
• Stuff I told you last time
• Was I right..?
• New regulatory developments
• Around the world and back home

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• Some of the themes from RDR and FOFA
• No more commission on investment business
• Clients and planners to agree on fees for clearly
  defined services
• Clients to be able to stop paying fees if they
  arent happy with service delivery

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• so
• was I right last year?

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• Indications I might not be wrong
• DRAFT Information Letter re Binder Regulations
• Ongoing TCF developments

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• New stuff coming from down under
• Proposed a definition for financial planner
• or financial advisor
• May not provide financial services or have
  someone do this on your behalf and use
  restricted words
• Unless you have a licence to give personal
  financial advice in respect of certain product
  categories
• National Entrance Exam
• Legislation to govern tax advice and a new
  regulator in this space
• Accountants now need a licence to give financial
  planning advice (from 1 July)

BIG NEWS!
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• Canada
• consulting public and industry on
• should fiduciary standard apply to all?
• mutual fund fees too high? ban commission?
• Singapore
• various things being considered
• raising standards
• raising CAR
• India
• new regulations for investment advisors
• define investment advice vs sales function
• CAR now required for investment advisors

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• FPSB RAP met in Washington during April
• Some key things
• Regulator helps with move from short to long(er)
  term client relationship
• Professional bodies help with move from caveat
  emptor to trusted advisor
• Compensation principles
• should not influence product
• should not influence advice
• client and planner agree on scope of services and
  compensation for services which can be reviewed
  by either party at a later date
• access to advice for all
• compensation model should support provision of
  professional advice

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The Retail Distribution Review

• What is all the fuss about?
• Adviser Charging
• Paid by the client a bottom up approach
• Qualifications
• Level 4 roughly degree level
• Clarity of role
• Independent or Restricted
• Do what it says on the Tin

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Client Propositions

• Can you answer the following questions?
• What are you for?
• What do you do?
• Who do you do it for?
• Where do you do it?
• The rule is
• If you have never turned away a potential
  client, you do not have a Client Proposition

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From Adviser to Planner to Business

• The key questions are
• Who pays you?
• Who is the client?
• The Actual Person or their Money
• A clue what are you reviewing and reporting on?
• Who is the client a client of?
• The Adviser / Planner or the Business?
• Do you have a (very good) job or a business?
• A clue a business owner gets paid twice

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Client Focussed - not Adviser Centric

• This does not mean you are not giving good
  Advice, or great service, or are not Ethical.
• It does mean that the systems and processes in
  place are there to support the Adviser / Planner,
  who then looks after the client
• So we need to review
• Culture
• Systems
• Client ownership

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We need to increase our Profits

• This is in two parts
• Increase income
• The 1 world
• Get paid for everything you do
• Capture more of the value chain
• Providers as Partners, not Parents
• Take out cost
• Process / industrialisation/ standardisation
• Take out risk

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Summary

• Regulation is on a path of Convergence
• There is a clear Business Model at the heart of
  their thinking
• It is based on existing Best Practice around the
  world
• When are you going to transition?

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THE FUTURE OF THE FINANCIAL PLANNING PROFESSION

• Wessel Oosthuizen CFP, FPSA

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• THE EGG PRINCIPLE

Historic value
The value of an egg
Dietary value
Esthetic value
Commercial value
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• THE EGG PRINCIPLE

Historical
What is the financial planner value proposition?
Current
Future
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Historical

• Global CFP certification program developed from
  U.S. model
• Job analyses leading to topic lists
• Examination syllabus based exclusively on topic
  lists
• Job tasks only used for weighting topics on
  examination

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Historical Weaknesses

• Students Why do I have to know that
• CFP certificants Getting the certification was
  not a demonstration of my ability to perform
  financial planning
• Employers I hire a CFP certificant, who knows a
  lot, but we still have to teach him how to be a
  planner
• Public How do I know exactly what a CFP
  professional can do for me?
• Internationally CFP certification in South
  Africa doesnt mean the same as CFP certification
  in China

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Historical Structure
Client
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Current - Global Standards

• Define the practice of financial planning
• Distinction between financial planning
  professionals and others
• Focus on competent practice

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How it All Fits Together
FPSB Global Competency Profile
Exam Education Experience
FP Process (Six Steps)
Ethical Principles
Inputs
Standards of Ethical Behaviour
Standards of Competence
Standards of Practice
Outputs
Professional Financial Planning Standards
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Framework
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Current Structure
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ASSESSMENT
Equivalent to 6 Hours/140 Question
Continuing Professional Development
1 Year Supervised -or- 3 Years Un-supervised
Body of Knowledge EQF Level 6 Minimum
Most Effective
Most Effective
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Regulator/Professional Body Roles
CFP Professional
Professional Adviser CFP Professional as
Adviser
New Model Adviser
Old Model Adviser
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Future Structure
PROFESSIONAL SKILLS
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THE FUTURE OF FINANCIAL PLANNING WILL BE
ABOUT Trust Appropriate judgement Autonomy
Initiative Responsibility Listening
Thinking Behaviour The interest of the client
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AT THE END ITS NOT ABOUT THE EGG BUT THE
CONTENT OF THE EGG
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Questions?
_at_gerhardtmeyer _at_PhilBillingham
Wessel in Bloem