Profile of the €uropean Financial Planning Association - Building Credibility for a Developing Profession – Standard Setting for Financial Consultants in Europe

272 Pro?le of the €uropean Financial Planning Association NFT 3/2004 €FPA is the European organization for the ?nancial consultancy professions. Its mem- bers and partners are composed principally of practicing ?nancial planners and ?nancial advisors, insurance and banking corpora- tions, education and examination providers, Universities, trade groups and various other stakeholders in the ?nancial services sector. €FPA represents geographic interests such as those of national insurance and banking associations as well as trade and professional associations from a vast array of ?nancial services adjunct occupations. €FPA’s ties to Europe’s leading professional, consumer, trade and policy making bodies ensures that it has a voice in all relevant discussions which affect the consultancy industry in Europe. The ?nancial consultancy profession in Pro?le of the €uropean Financial Planning Association Building Credibility for a Developing Profession – Standard Setting for Financial Consultants in Europe by Michael Fawcett Michael Fawcett is Chief Executive Of?cer of the €uropean Financial Planning Association. The €uropean Financial Planning Association (€FPA) has emerged as a European organisation that serves the manifold roles of advocate and engineer of the ?nancial consultancy professions and as a protector of the public. With the growing complexity of society and our ?nancial services sector, €FPA’s public role on national and European levels has gained both emphasis and breadth. Europe can be viewed as a multisectoral confederation, at the centre of which is the €uropean Financial Planning Association. While €FPA does not have the legal power to discipline ?nancial consultants (other than by suspending or terminating €FPA membership rights), it leads by developing professional standards and ethical guidelines. €FPA serves as the European voice of the profession: it is a designer of education and examination matrices, a codi?er of ethical behaviour, a pioneer in ?nancial consultancy education, and a moral force for consumers, working to make the ?nancial consultancy system work better for all Europeans. Michael Fawcett fawcett@efpa-europe.org 273 Pro?le of the €uropean Financial Planning Association €FPA’s Genesis The seminal concepts leading to the creation of the €uropean Financial Planning Association derived from meetings which took place at the Erasmus University Rotterdam in the fall of 1998. To be certain, the original concept was not to build a standard setting, accrediting and certifying body for ?nancial professionals in Europe, but rather, was to establish a think tank for academicians and educators that could allow them to further develop the body of theory and knowledge respecting ?nancial consultancy and the related arts and sciences. This think tank, it was hoped, would also have the responsibility of improving educational programs, examination frameworks and aca- demic networks across Europe. By the winter of 1998 it became clear, through a growing number of cross-border correspondences, that there was gathering interest for an organisation that would go beyond the initial think tank concept towards an organisation which could provide not only research, academic and educational structures for an emerging profession in Europe, but one which could actually set professional standards for educational programs, examinations, eth- ics, and skills sets. Formative years €FPA was founded on December 18, 2000 in Rotterdam, the Netherlands, by nine af?li- ated countries in a ceremony at the Erasmus University Rotterdam. Representatives from 15 countries were present along with nearly a hundred guests and media representatives. The ?nancial consultancy professions, as we understand them today, barely existed in Europe even those few years ago. Financial consultants were generally private bankers or insurance company practitioners who trained under a system of apprenticeship or through a patchwork of training programs offered in house or by banking or insurance institutes; independent ?nancial consultants represented large portions of markets in speci?c countries only but were, as a rule, not dominant in Europe as a whole. There was no established Euro- pean code of ethics; there was no European organization to serve as a forum for discussion of the increasingly intricate issues involved in the practice of ?nancial consultancy and there was little cross border discourse on developing the profession. The founding of €FPA changed all that. The ?rst €FPA Statutes, which are still substantially the guiding charter of the as- sociation, recognised the goals of €FPA as seeking to advance the profession of ?nancial consultancy, to promote the administration of ethical behaviour, to act as an educator and guide to consumers of ?nancial services ad- vise and to ensure uniformity of all ?nancial services standards throughout Europe. Today, the stated mission of the €FPA is to be the European representative of the ?nancial consultancy professions (including both tied and independent ?nancial advisors), serving the public and the profession by promoting ethical behaviour, professional excellence and organisational transparency. The objectives of the Association, published in the €FPA Articles of Association are: • Developing universal educational, profes- sional, ethical and examination standards for ?nancial consultants in Europe, • Developing ?nancial planning and ?nancial advising as full ?edged professions across Europe, • Increasing the academic and professional body of theory and knowledge concerning ?nancial planning and ?nancial advising, • €FPA receiving from national and European regulatory bodies, of?cial legal recognition for the oversight of ?nancial planning and ?nancial advising, 274 Pro?le of the €uropean Financial Planning Association • Enhancing the standing of the €uropean Financial Planner and €uropean Financial Advisor marks as well that of the ?nancial advising and ?nancial planning professions in the eyes of consumers, the ?nancial serv- ices sector, academic institutions and other stakeholders interested in the development of ?nancial planning and ?nancial advising as a whole, • Advancing ethical behaviour as a hallmark of the ?nancial planning and ?nancial advis- ing professions in Europe. €FPA’s Organisational Structure As a European Non Governmental Organisa- tion (NGO), €FPA confronts many of the same challenges faced by European policy making entities, in that €FPA promulgates and oversees standards and establishes Association policy across many boundaries. Cultural variations have a profound impact on the decisions, approaches, and actions of the Association. Knowing that wisdom and leadership is not con?ned to the boarders of countries with large populations, €FPA follows the philosophy that each country possesses one vote, regardless the numbers of national members or the popula- tion of the country represented. The €FPA Board of Directors is responsible for setting the strategic plan for the Associa- tion. The Chief Executive Of?cer carries out the strategic plan. Other obligations remain in the hands of the National Af?liates and all Af?liates have wide latitude in pursuing the development of the profession to meet the needs of their national markets and ensure the sustainable and ethical growth of the profes- sion into the distant future. €FPA operates similarly to many interna- tional standard setting and certifying organisa- tions charged with like responsibilities. €FPA does, however, have several special provisions built into its statutes, which distinguish it from these other ?nancial services NGOs. These provisions direct the National Af?liates in their behaviour and de?ne the character of the Association through both word and deed. Openness Building a National €FPA Af?liate demands input from a vast array of specialists from various ?nancial services professions. €FPA understands that ?nancial consultancy is a hybrid of many professions holistically fused to create a single occupation. Leaders and in- novators from the many trade and professional groups which operate in the ?elds that link to ?nancial consultancy are thus very helpful in de?ning national boundaries for speci?c knowledge requirements and skills in the sev- eral disciplines of ?nancial consultancy. €FPA thus requires of its National Af?liates that they remain open to all relevant and quali?ed organisations and allow them to participate in the development of the National Association. Beyond the requirement of general openness, €FPA expects that all Af?liates have, within a reasonable time, Board Members representing the insurance, banking, educational and policy making sectors from their respective countries. This provision ensures that each National Af?liates will have input from a wide variety of in?uences and sectors and will ensure that National Af?liates bring a balanced approach to the market in each country. Independence The integrity of any NGO relies on its ability to demonstrate that it is independent from external in?uences which could affect its ability to remain fair and impartial. From the outset, €FPA was determined to be able, unlike many other ?nancial services certifying bod- ies, to demonstrate that it had no con?icts of interest deriving from the system it employed to certi?ed its Members. To ensure €FPA’s interest were untainted, €FPA structured its educational system in a way that guaranteed that no party in the educational chain had 275 Pro?le of the €uropean Financial Planning Association a direct interest in the success or failure of another party in the chain. €FPA National Af?liates thus do not provide educational programs themselves but rather accredit edu- cational program providers which offer stu- dents courses in ?nancial consultancy. €FPA Italia, for example, accredits a wide range of training and education entities: to date over forty programs are accredited in Italy. With the exception of governmentally accredited Universities, no educational program provid- ers can examine their own students. Thus €FPA accredited examination providers have no private interest in the success or failure of the students taking their examinations, since they do not also train them. Importantly, no €FPA National Af?liate then has a vested interest in any educational programs provided. The sole role of €FPA is to accredit programs and examinations, to ensure that the providers meet the €FPA standards and to provide professional oversight for €FPA Members. €FPA thus has no con?ict of interest deriving from the system which results in €FPA certi?cation. Practitioner Advisory Committee Every system of standards has a series of checks and balances to ensure that the stand- ards are current, rational and possess real world signi?cance. €FPA established the Practitioner Advisory Committee (PAC) in the spring of 2002 to provide the Board with wide ranging advise re?ecting the needs of professionals who operate as ?nancial consultants, in the trenches, day in and day out. The PAC’s tasks have included advising the €FPA Board on the €uropean Financial Planner and €uropean Financial Advisor curricula, to better hone the skills sections and provide real world insight into the job knowledge requirements. In the future, in addition to their ongoing evaluation of the €FPA educational programs, PAC will also be advising the Board on examinations matrices, conference themes, Member services and publications. The €FPA Institute True to one of €FPA’s core objectives of increasing the academic and professional body of theory and knowledge for ?nancial consultancy and the related arts and sciences, €FPA is moving forward with this aspirational concept in planning for the establishment of the €FPA Institute. The Institute, though not fully formed yet, it is hoped, will become the European think tank for academic research in the ?nancial services sector. The €FPA Institute will be composed of educational program providers and leaders in ?nancial services training from a network of more than 50 European Universities and professional training institutes. The Institute will undertake many meaningful tasks. It is expected that the Institute will assist in the proposed €FPA EU Leonardo Project as its ?rst and most impor- tant task. The Institute will help to undertake an analysis of the European Examination Framework in Financial Services, the objec- tive being to establish a single examination framework for €FPA accredited examination providers in the various countries in which €FPA has Af?liates. The Institute will also be charged with the tasks of evaluating candidate educational program provider applications to determine whether or not they meet €FPA’s standards. €FPA also hopes that the Institute will initiate student and teacher exchange programs among the various Universities and Alumni Associations. The Institute will also be responsible for creating a database of Master and Graduate thesis in ?nancial planning to help to provide relevant and up to date research materials for future generations of students. Finally, the €FPA Institute will be expected to generate their own high-level research material in the form of the €uropean Journal of Financial Planning. It is hoped that within the next ?ve years, the Journal can become the academic, research and educational source for ?nancial consultancy in Europe. 276 Pro?le of the €uropean Financial Planning Association Corporate Membership To date, no European standard setting and certi?cation organisation has directly en- gaged ?nancial services providers as possible Members that could derive bene?ts from and play an active role in the evolution of the As- sociation. Indeed, until €FPA introduce the corporate membership option, €FPA member- ship had been drawn solely from individual applications. The common wisdom is that a link to the corporate as well as the individual is essential. The objectives of the corporate membership option are: • To extend the disciplines of €FPA member- ship into the corporate sector, • To increase the rate of membership growth, • To ensure that corporate objectives align as far as possible with €FPA objectives, and • To enable input from the corporate member on the objectives and strategy of €FPA. €FPA has seen the Corporate Membership option achieve unexpected levels of success and explosive growth. Corporate Membership has been most obviously embraced in Spain where €FPA España has signed 11 of the top 20 ?nancial services providers as Corporate Members. €FPA hopes to close several Eu- rope wide Corporate Membership agreements within the next year as well as a large number of national Memberships that are already near to consummation. Achievements to date €uropean Financial Planner Program Programs accredited by €FPA Af?liates pro- vide a ?nancial consultancy education which meets a minimum set of standards as prom- ulgated by €FPA. Every Af?liated country in Europe has determined that graduates of €FPA accredited programs are able to sit for the €FA or €FP examination in their respec- tive countries. The role that €FPA plays as an accrediting body has enabled accreditation to become uni?ed and European in scope rather than fragmented, with the potential for incon- sistency, among the countries of Europe. The standards and rules are adopted by the €FPA Board of Directors. They state the requirements that must be satis?ed for an educational program provider to be approved by €FPA and the processes that are followed for approval and periodic review. The stand- ards establish the minimum requirements for a sound program of ?nancial consultancy education. Universities and training institutes may have their own requirements for gradua- tion, rules and procedures that go beyond the standards, and many such institutions do. The standards encourage ?nancial consultancy educational program providers to adopt rules and requirements beyond what the standards require that further the school’s own mission and aspirations. The €uropean Financial Planner program was developed by University program co- ordinators and national bank and insurance institute program developers from more than ten countries. It represents an educational program developed by Europeans for the Eu- ropean market place. The program is utilised by all €FPA National Af?liates. Financial planning is a multidisciplinary occupation integrating a variety of ?nancial services, legal, and consultancy disciplines into a single unique profession. Financial planners must therefore master a variety of specialised subjects, from invest- ment planning, to insurance planning, to tax planning, to estate planning, and many other disciplines running the gamut of private ?- nance. The ?nancial planner must at the same time utilise speci?c skills, which afford her the ability to communicate ideas and complex concepts to clients in a simple and direct manner. The €uropean Financial Planner Pro- gram is therefore designed to provide future 277 Pro?le of the €uropean Financial Planning Association practitioners with the knowledge and key skills and skill assessment methods to ensure that graduates not only have the knowledge needed to perform their professional duties but the skills to effectively communicate their acquired knowledge to clients, while perform- ing the speci?c functions of the job. The client lifecycle method plays an impor- tant role in the €uropean Financial Planner program and as a result the curriculum also highlights the effects of changes in the client’s life; the effects of marriage, separation and di- vorce, childbirth, career changes, inheritance, health dif?culties, retirement, and many more. The student is provided the knowledge, skills, and process information to plan effectively and comprehensively for each of these lifecycle eventualities and others. The coursework and at home work also illustrate actual uses of ?nancial planning tools and technologies in the development of segmented and comprehensive plans to help re?ne students’ research, communication and decision making skills. The €uropean Financial Planning Associa- tion stands at the vanguard of ethics in the ?nancial planning sector in Europe and as such has included a module designed speci?cally to address the needs of ?nancial planning practitioners working in Europe’s evolving ?nancial services sector. The €uropean Financial Planner Program is designed as the follow up to the €uropean Financial Advisor (€FA) program or as a stand along program for individuals intending to enter into the ?nancial planning profession as a €uropean Financial Planner (€FP). Each of the modules explores the complex issues involved in planning for the specialised in- terests of a variety of client types; from high net worth private clients, to entrepreneurs, to Small and Medium Enterprise (SME) own- ers, to majority shareholders and everything in between. €uropean Financial Advisor Program: The research undertaken in the preparation of the €uropean Financial Advisor program included, among others, a cross boarder analy- sis of ?nancial topics and pedagogical theory derived from various training methodologies prevalent in the European ?nancial services sector. Additional research included what we at €FPA believe is the ?rst ever cross border comparative analysis of skills competences for ?nancial advisors. The resulting syllabus and program therefore is the most current and comprehensive available with respect to learning outcomes and skills in Europe. The curriculum is designed to raise stand- ards across the ?nancial services sector in Europe and to improve client protection by ensuring that those involved in ?nancial consultancy have a sound understanding of key principles. In co-ordinating the various structures, the following was identi?ed: • The current examination matrices of various examinations structures are confusing and in?exible’ • There are inconsistencies and differences in standards between quali?cations for the same activity’ • The examination structure and numerous associated designations are confusing’ • There is a cost to ?rms when staff moves between activities if they must be repeatedly examined on similar content’ • There are gaps and inconsistencies in ex- amination provisions’ • Some syllabuses cover content areas in greater depth than others’ • There is a requirement to ensure that prac- titioners remain up to date via regular as- sessment of competence. 278 Pro?le of the €uropean Financial Planning Association The current incarnation of the €FA program is expected to be completed by the end of 2004 when it can be used in the planned EU Leonardo project. €FPA Agent (under development) In recognition of the need of many countries to develop an educational program for practition- ers just entering into the ?nancial consultancy professions, €FPA is exploring the develop- ment of an agent level educational program. It is hoped, following the initial exploration that the ?rst educational programs could begin by the start of 2005. Ethics €FPA has published a code of ethics that was written speci?cally for ?nancial consultancy practitioners in Europe. It represents the ethical ideology of more than 20 ?nancial services institutes and providers. The €FPA Code of Ethics is best understood through its motto: “The €FPA licensee is not honourable because she acts ethically, the €FPA licensee acts ethi- cally because she is honourable.” More than 2,000 persons certi?ed by €FPA agree to be bound by the €FPA Code of ethics. Countries represented The €uropean Financial Planning Association, Europe’s largest and most respected ?nancial consultancy certi?cation and standard set- ting entity, has full and observing members from: Belgium, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, The Netherlands, Norway, Poland, Portugal, Russia, Slovenia, Spain, Sweden, and The United Kingdom. International aspirations A new and potentially signi?cant develop- ment is the planned establishment of an International Financial Standards Associa- tion (IFSA). €FPA, representing Europe, is in discussions with regional representatives from Asia-Paci?c, North America and South America, to establish a global organisation which will join under the auspices of a single umbrella organization. The Association could include 32 countries, making the conceived IFSA the largest ?nancial standards setting body for ?nancial consultants in the world: by far.