As a founding member of the Society of Financial Planners of Ireland I am truly delighted to see increased media coverage of our fledgling organisation. This delight extends not from the ego trip that one might think such a name check might get but from the financial media’s recognition that far higher professional standards in the area of personal financial advice are needed in Ireland.
Unfortunately the minimum standard that exists in Ireland to give personal financial advice is associated with those that had more than five years work experience in our industry (and not any professional qualification) at the time that the minimum competency was introduced by the financial regulator some years ago. If you got in under this level, it was assumed by the regulator that you had sufficient knowledge and professionalism.
When a minimum standard was introduced it was only to apply to either new entrants from that point onwards and then only to the level of a Qualified Financial Adviser (otherwise referred to as a QFA). With all due respect to QFAs, of which I am one as well as a former President of the Life Insurance Association which was the educational body that introduced this qualification, it is now incumbent on all financial advisers to up their game considerably in terms of professional prowess.
As someone with over 40 years experience in our industry as well as being regularly engaged in Expert Witness work for cases involving negligent or reckless advice against the financial services industry I can attest to the relatively low standards that still seem to persist in our industry. Don’t get me wrong there are really good people that practice in the area of financial advice, even some who do not have any personal finance qualifications. Unfortunately they are in the minority and there are very few good financial advisers out across the country relative to the population despite the widespread recognition of the QFA.
The goal of “The Society of Financial Planners of Ireland” (www.sfpi.ie) is to provide education, training and networking for its members, who are professionals specialising in financial planning, investments, trust and estate planning and pensions.
Membership is only open to those who have achieved a minimum financial planning accreditation such as the CERTIFIED FINANCIAL PLANNER™ and who apply a fee based method of remuneration. Included among its members are those involved in the legal, tax, accountancy, banking, pension and financial planning sectors in Ireland.
Financial Planning is radically different from what the perceived approach of financial advice is in Ireland. Most Irish people will have experienced just a simple financial product purchase because of a particular once off need.
Financial Planning on the other hand starts with client lifetime goals and then analyses an individual’s financial situation in the same way that an accountant might analyse a business. A typical financial plan would have its roots based in a personal income and expenditure statement, a family balance sheet and a lifetime cashflow analysis. Leading on from this a highly personalised financial plan involving elements of investment, retirement, financing, estate protection and life assurance is produced.
Reflecting on the demise of the Celtic Tiger, it strikes me that how much different our economy might be if more people had been advised not to do some of the crazy financial investments they did and if someone had examined their personal financial affairs in more detail. Imagine if someone had cried halt sufficiently enough that more people could have thought twice before running headlong into financial ruin.
I’m not saying that the Society of Financial Planners of Ireland could have held back the tide then but it seems that if ever Ireland needed personal financial leadership, it is now. Not to undo the sins of the past but to prevent such experiences re-occurring going forward when the next generation makes their money. History has a habit of repeating itself. Perhaps next time, better financial planning might minimise the fall out. The Society of Financial Planners of Ireland hopes to lead the way in this regard.