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What is the State of the Financial Planning Profession in your Territory?

South African CFP John CampbellBy John Campbell, CFP

The financial planning profession has come a long way in South Africa and I have noticed a big change amongst financial planners in their outlook on how they position themselves with clients. We still have big challenges as there is the continued bumping of heads with the product houses that persist with employing financial planners to distribute their products, which, as we all know, brings in an element of conflict when doing what is right for the client.

Many people who are new to the profession are brought in under the wrong pretences but in the industry there is certainly a far greater awareness of what financial planners should be doing for their clients. Our regulatory environment is very advanced and I guess, like in many other territories, we have a far more onerous job on our hands. At the same time, this was all necessary as the industry needed a shake up and to be put on the right track.

What To Do?

What should financial planners and CFP professionals be doing to publicly support recognition for financial planning as a distinct professional practice globally?

The starting point would be to not use the title, “financial planner” so loosely. I don’t think that everyone in the insurance/investment industry is a financial planner. There should be some kind of control in place restricting the use of the term, financial planner.

When a CFP professional is addressing an audience, be it within their company or a public audience, they should always spend a few minutes talking about the CFP designation and what it means and involves. A financial planner should partner with clients on their journey through life, guide them through the various transitions encountered and educate them on an ongoing basis. So often, clients are misled by the behaviours of the financial planner and in many cases it’s the planners who does not position themselves correctly, as they see themselves adding value in a particular area of planning and not looking at the overall picture. Many clients see their planner as an investment adviser, money manager, economic guru etc as planners position themselves incorrectly.

A financial planner is someone who should position themselves as the CFO of the family, and every financial decision taken is in consultation with the planner. A CFP is a qualification that combines elements of numerous professions into one and is therefore unique in that we can advise a client on these various disciplines and how it relates to their life.

Planner vs. Advisor

How would you define the term “financial planner?” How is a financial planner different than a financial advisor?

This is an interesting question and as mentioned above it’s how you position yourself to a client. In my opinion, a financial planner is a person qualified with a CFP designation who would assist clients in developing strategies to manage their financial affairs to meet their life goals. This is a far more engaging and thorough role, where the planner would understand the family dynamics and engage with the client on an ongoing basis.

A financial advisor is a far more generic term used more loosely and I would see this as somebody who renders financial advice. This person would not necessarily be qualified and would not be entrenched in an ongoing relationship with the client.

The problem in the industry at the moment is that there is no formal differentiation between these two titles and therefore, they are often used incorrectly and inappropriately. At the end of the day, we can almost call ourselves anything, but we need the CFP designation to be professionalised and seen as a professional qualification.

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