Collaborating with Industry to Develop Financial Planning Education
Posted: 3 Oct 2011 Last revised: 11 Jan 2018
Date Written: September 30, 2011
Financial planning is in a process of professionalization. As an industry, the growing demand for financial planning services has been fuelled by compulsory superannuation, a wealthier but time poor middle class, increasing life expectancy (Warschauer, 2002), an aging baby boomer population (Martin, 2007), a complex tax system and fluctuating domestic and international stock markets since the Global Financial Crisis (GFC). The GFC, particularly in the wake of corporate collapses such as Opes Prime, West Point and Storm Financial, has highlighted ongoing concerns about the competency standards of financial planners (ASIC, 2003; ICAA, 2007; PJC, 2009). The Commonwealth government, the Australian Securities and Investments Commission (ASIC) and the Financial Planning Association (FPA) have responded to these concerns. As part of the Future of Financial Advice (FOFA) reforms, the government has appointed industry and academic representatives to an Advisory Panel on Standards and Ethics for Financial Advisors. The Panel will provide recommendations on professional and ethical standards, including its position on competency requirements for financial services professionals to the ASIC. ASIC has proposed its own assessment and development framework for financial advisors including a national advisor certification exam, 12 months supervision by an experienced advisor and online knowledge update reviews (ASIC, 2011).
The FPA, the peak body representing financial planners in Australia, has developed and implemented a professional framework for financial planners with three key components: professional membership, professional conduct and professional accountability (FPA, 2009). Professional membership entails entry into the CFP program, formal education and experience. It is FPA policy that from 1 July 2013 all new Associate Financial Planners of FPA will be required to have an approved degree and complete one year of supervised experience before being authorised to promote themselves as FPA professionals. The sole education pathway into the CFP program will be via an approved financial planning degree or otherwise a bridging qualification for non-approved financial planning graduates or graduates of related disciplines (FPA, 2010).
Accordingly, higher education institutions will play a critical role in professionalising financial planning by offering education programs which promote a seamless transition from student to professional (Goetz et al., 2005). However, is the traditional mode of tertiary education whereby students’ studies can be divorced from industry application going to be sufficient to address the needs of this sector? Particularly for financial planning the transition to professionals will require students to be equipped with not only technical financial planning knowledge, but a wide array of generic skills (Goetz et al., 2005). Financial planning is a client-centred process and as such requires excellent communication, listening, questioning and interpersonal skills (Eyssell, 1999; Martin, 2007; Williamson et al., 2007). However it is apparent that financial planning graduates can lack these skills (Goetz et al., 2005: 240; Murphy and Celeste Rossetto, 2010). The leading study in this area is Jackling and Sullivan (2007). The authors asked financial planners to rank the importance of various cognitive and behavioural skills and skill deficiencies in recently qualified planners. The three most important skills were “listening”, “oral communication” and “questioning technique” which also represented three of the five greatest skill deficiencies (Jackling and Sullivan, 2007: 223). The ASIC’s study of financial planners also identified evidence of poor written communication skills (ASIC, 2003). In addition to generic skills, there is a need to explore and understand the ethical responsibilities of being a professional advisor.
Work Integrated Learning (WIL) is one method which can improve the generic skills of graduates (Precision Consultancy, 2007; Patrick et al., 2008) and shorten the transition from financial planning student to professional (Goetz et al., 2005). WIL programs are described as “educational programs which combine and integrate learning and its workplace application, regardless of whether this integration occurs in industry or whether it is real or simulated” (Atchison, Pollock, Reeders, and Rizzetti, 2002, p. 3). Internships, service learning, practicums and professional development programs have been promoted in financial planning education (Goetz et al., 2005; Morris, 2007; Annis et al., 2010; Purnell, 2011). While WIL can assist to address these issues, it is questionable how successful this is if students are not adequately prepared prior to their placement. Also, how can you ensure that students are exposed to fundamental issues that may straddle or sit awkwardly between academic and work place learning? In particular, how can you facilitate a shared responsibility for student learning between the tertiary sector and the industry in which many students will end up working in? Indeed, the importance of collaboration between industry and tertiary institutions in improving financial planning education has been stressed (Warschauer, 2002; ASIC, 2003).
This paper describes the response by one Australian university to collaborate with the financial planning industry to develop a Degree that implements a collaborative responsibility in providing a more comprehensive and contextualised learning environment to address some of the perceived inadequacies in graduates, as well as the profession as a whole. This Degree (the Professional Degree), provides not only traditional academic components of a financial planning degree, but also includes an internship experience, as well as a continuous ‘professional’ orientation program (the ‘PD Program’). It is particularly within the PD Program that the collaborative responsibility for student education is demonstrated, with the delivery of many of the sessions being shared between industry and academics. It will be argued that this collaborative approach is an important innovation in moulding the professionals of the future in financial planning.
The next part of this paper will discuss the theory behind contextualised learning, WIL and authentic learning. Then the structure of the Professional Degree and the PD Program will be outlined, with an emphasis on how the collaboration between the university and industry occurred to develop and refine the PD Program. The following section will then provide some evidence of outcomes in terms of industry satisfaction with the program. The final sections then consider limitations and the potential for further research, before concluding.
Keywords: Internship, Work Integrated Learning, generic skills, financial planning education, higher education, finance industry
JEL Classification: I21
Suggested Citation: Suggested Citation