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Financial planner
Licensing of financial planners and financial advisers
The first country to introduce legislation that require 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) [1] 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 (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 a RFP designee (most, if not all Malaysian FChFPdesignees also carries 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.
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 a RIA Registered Investment Advisor License or Status.
Being 'licenced' 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 advise 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, most well-known financial planning certification service marks is the Certified Financial Planner(CFP), which has gained global recognition because of its active standard setting activities and worldwide presence. The CFP designation was first introduced in the United States in the early 1970's to meet the need of the consumers. The CFP mark now belongs to the CFP® Board of Standard’s(“CFP Board”), USA, which has member associations world-wide.
The 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 Registered Financial Planners Institute 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 a International organization with chapters and members throughout the world. The RFP Institute offers study programs both in class room 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, CPA's, 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.
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 AICPA members 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;
* 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 obtained the CPA (FPS) designation.
The Chartered Financial Consultant(ChFC) is another prestigious financial planning qualification, which is conferred byAmerican College, USA).Since 1982, the ChFC has remained among the most extensive education available for professionals seeking a designation in financial planning. Todate, 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.
The rest of the certification qualifications related to financial planning include: Fellow, Financial Services Institute (conferred by LOMA, USA); the CWM Chartered Wealth Manager (conferred by the AAFM) designation; the Certified Financial Marketing Consultant (CFMC) conferred by the Institute of Marketing Malaysia.
Accredited business school, training centers and education providers in financial planning
Globally, cross-recognition agreements are being developed to facilitate the learning of financial planning. The 2 major accrediting agencies AACSB and ACBSP in the west, which accredit over 560 of the best business school programs, provides 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.
Source of information is wikipedia