The Professionalization of Financial Planning in Australia: an Institutional Logics Perspective

Journal of Public Budgeting, Accounting & Financial Management,

30 Pages Posted: 24 Sep 2021

See all articles by Daniel W. Richards

Daniel W. Richards

York University - Faculty of Liberal Arts & Professional Studies

Sarath Ukwatte

Royal Melbourne Institute of Technolog (RMIT University) - School of Accounting, Information Systems and Supply Chain

P. W. S. Yapa

Royal Melbourne Institute of Technolog (RMIT University) - School of Accounting and Law

Date Written: September 17, 2021

Abstract

Purpose

This paper researches the professionalization of financial planning in Australia. The authors investigate how the institutional logic of major institutions inhibits this occupation from moving toward a professional status.

Design/methodology/approach

The study uses documentary analysis of government inquiries into Australian financial services from 1997 to 2017 to ascertain the various institutional logics relating to the professionalization of financial planning. The method involves generating ideas from the data and applying an institutional logic framework to make sense of impediments to the professionalization of financial planning in Australia.

Findings

The regulator adopted a self-regulation logic that empowered financial institutions to govern financial advice. These financial institutions have a logic of profit maximization that creates conflicts of interest in financial planning. The financial planning professional bodies adopted a logic of attracting and retaining members due to a competitive professional environment. Thus, financial planners have not been defined as fiduciaries, professional standards have not increased and an ineffective disciplinary resolution system exists.

Research limitations/implications

This research illustrates the various institutional logics that need to be addressed to professionalize financial planning in Australia. However, the data used is limited to that drawn from the parliamentary inquiries.

Originality/value

Prior research on the emergence of professions such as accounting has shown that financial institutions are sites of professionalization. This research shows that financial institutions impede professionalization in financial planning. Also, where the state granted legitimacy to other professions, this research indicates that the state regulator's logic of self-regulation has not legitimized financial planning.

Keywords: Financial Advice, Financial Planning, Sociology of Professions, Professional Bodies, Institutional Logics

JEL Classification: D14, G50, D59

Suggested Citation

Richards, Daniel and Ukwatte, Sarath and Yapa, P. W. S., The Professionalization of Financial Planning in Australia: an Institutional Logics Perspective (September 17, 2021). Journal of Public Budgeting, Accounting & Financial Management, , Available at SSRN: https://ssrn.com/abstract=3928263

Daniel Richards (Contact Author)

York University - Faculty of Liberal Arts & Professional Studies ( email )

Toronto, Ontario M3J 1P3
Canada

Sarath Ukwatte

Royal Melbourne Institute of Technolog (RMIT University) - School of Accounting, Information Systems and Supply Chain ( email )

124 La Trobe Street
Melbourne, 3000
Australia

P. W. S. Yapa

Royal Melbourne Institute of Technolog (RMIT University) - School of Accounting and Law ( email )

124 La Trobe Street
Melbourne 3000
Australia
61 3 9925 1606 (Phone)
+61 3 9925 5741 (Fax)

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