As chair of the Board of Directors (BoD) of the Financial Planning Standards Board (FPSB), Gerhardt Meyer CFP® has played a key role in setting global standards for the financial planning profession, but more work remains to be done
by Dan Atkinson
Sitting astride the worlds of law and financial services, and with experience of setting standards in financial services globally and in his native South Africa, Gerhardt Meyer brings a unique perspective to the role of FPSB Board chair. This follows a spell as chair of an affiliate CISI body, the Financial Planning Institute of Southern Africa (FPI), between January 2009 and February 2012. His current term of office, including his time as chair-elect, began on 1 April 2018 and runs until 31 March 2021.
Gerhardt says that the main responsibility for setting standards for the global financial planning profession lies with FPSB's Professional Standards Committee, which is tasked with constantly reviewing and – if appropriate – updating or crafting new proposed standards that are then put to the BoD. He explains: "The chair doesn't get that involved at the drafting level, as it is a detailed topic that takes months of work at a time and the chair has many other responsibilities and board committees to attend to." But he has been at the forefront of FPSB's attempts to raise standards to the point that the public, governments and regulators recognise the value of the profession and consumers can easily identify practitioners who observe those standards.
Part of the challenge is defining what it is that financial advisers do. Everyone, Gerhardt says, knows what a doctor is, or a nurse. But what is a financial adviser? Is it the same as a financial planner? (See cisi.org/dfm-planners and cisi.org/blurredlines for more on this.)
Gerhardt explains that the role of financial planners has grown over the past few decades, from the 1980s when it mostly involved advice, to a more holistic modern-day approach that takes life goals into account. He also notes an increasing focus on professionalism: "As financial planning grows [in February 2020, FPSB announced a net rise in those with the CERTIFIED FINANCIAL PLANNER™ certification during 2019 of 6,744 to 188,104, taking the average annual increase over the previous five years to 3.6%], practitioners increasingly want to be seen as professionals, adhering to the world-class professional standards that are upheld by FPSB."
Regulation, regulation, regulation
In a sense, most modern regulatory roads lead back to the global financial crisis of 2008. Gerhardt, who chaired FPSB's Regulations Advisory Panel between 2014 and 2017, having served as a committee member on the panel for four years prior to taking up the role, accepts that there was an increase in regulation in its wake, but as to whether this amounted to over-regulation depends on who you ask.
Gerhardt explains that the South African Financial Sector Conduct Authority (FSCA) has a pragmatic approach to introducing new rules and systems. "[The FSCA has] a high regard for various other regulators, so often observes and consults with them on how regulatory changes work out for them before implementing them in South Africa," he says.
"Practitioners increasingly want to be seen as professionals, adhering to the world-class professional standards that are upheld by FPSB"
One example is the UK's Retail Distribution Review (RDR), followed by a similar Australian reform. Both aimed at an overall change of many aspects of the sector, but to a large degree focused on moving from rules-based to principle-based regulation and shifting from commission to fees. Gerhardt says: "South Africa subsequently implemented its own RDR programme [with the first phase having begun on 1 January 2018] but has only been introducing bits and pieces of it, as it continues to observe successes and failures elsewhere."
Gerhardt believes that the emphasis has shifted from turning out pages of regulations or explanations that the consumer won't read to a more practical approach, based on broader principles rather than detailed rules, and a lot of this is attributable to the increased dialogue with bodies such as FPSB.
Easing the compliance burden
For a number of small firms around the world, he adds, it is certainly true that the cost of compliance is still a problem, something which he has become aware of in discussions with FPSB's affiliate organisations and practitioners globally. To help cope with this, he says, FPSB is urging all financial planning businesses to move away from a mindset in which 'compliance' and 'business' are separate functional areas and in which financial planners reluctantly drag themselves away from 'real' business activities to engage in the tiresome but mandatory activity of compliance. That, he believes, is a recipe for making regulation into something far more burdensome than it need be.
A common standard
At the opposite pole from extensive, possibly excessive, regulation has been the notion that, given that defrauding clients is a criminal offence in all jurisdictions, there is no need for a professional financial planning body that sits between the law and the regulator on the one hand and the market on the other. Should we not return to the old verities of jail for fraud but caveat emptor for everything else, especially as personal financial advice is so bespoke and subjective?
Gerhardt thinks not. "No one has ever suggested to me that we don't need norms and standards." But he goes on: "And maybe the opposite is true – some people might suggest where a financial planning professional body exists there is no need for additional (excessive) regulation. They say: 'I am a CFP professional, why do I need a regulator too?'"
Gerhardt believes that the emphasis has shifted from turning out pages of regulations that the consumer won't read to a more practical approach
He does not himself take this view, preferring to see a clear distinction between regulators and professional standards bodies, with each responsible in its own sphere. It all loops back, he says, to the need to bolster public confidence in financial planning and to raise awareness of the worth of financial advice. Here, Gerhardt says, regulators worldwide have an opportunity to partner with FPSB, and the financial planning professional bodies that make up the FPSB network globally, to educate the public as to the value of financial planning standards and professionalism as upheld by FPSB and CFP professionals worldwide. "There is a lot of work still to be undertaken."
A distinguished pedigree
Gerhardt has both a legal background and previous experience in standards-setting and the advocacy aspect of building the financial planning profession. Asked if his lawyer background means he approaches his role as FPSB Board chair in a different way from someone with, perhaps, a purely financial background, he replies: "A short answer would be: not as much as one may think, for the simple reason that most of my legal life has been spent in the financial services sector."
But, he adds, there are some nuanced differences of which he is aware, and slight differences of approach. The law is a discipline, says Gerhardt, so, for example, it has always prompted him to recognise the importance of getting things done in a timely manner. Similarly, once the participants in a meeting are in agreement, he is keen to get it all written down straight away: "I feel a constant imperative to dot the I's and cross the T's."
2019: Chair, FPSB Board of Directors
2018 Chair-elect, FPSB Board of Directors
Head: technical support, PSG Distribution at PSG Konsult
2016: Joins FPSB Board of Directors
2014: Chair, FPSB's Regulations Advisory Panel
2012: Advice development and governance, Old Mutual
2005: Chair, Pension Lawyers Association of South Africa
2001: Board member, vice chair and chair of Financial Planning Institute of Southern Africa
1998: Legal adviser, insurer and their advisers (Old Mutual)
Looking at FPSB, and whether it could operate more effectively, Gerhardt says the BoD works well ("but you may reply that I would say that!"), while accepting that there is always room for improvement.
Ideally, he says, one change for the better would be if the BoD could meet face-to-face more often. "But that is very hard, for logistical and cost reasons." As a result, he says, the BoD relies a great deal on videoconferencing. "It is really helpful to have board members from around the world.”
To conclude where he began, Gerhardt returns to the key question of public confidence and trust in financial advisers. Are consumers reassured by FPSB's vision, mission and strategy? Are they aware of its existence?
He says: "I feel we have been pretty successful in getting our story out there. Our global community meetings, for example, are very well attended by affiliate organisations' leadership who, in turn, help feed the message out, through social media and subsequent public speaking engagements, to the global profession and to clients." These meetings are held twice a year and involve the FPSB BoD, the leadership (both volunteer and paid) of FPSB affiliates from around the world, and various support bodies including the Chief Executives Committee, the Member Advisory Group, the Asia-Pacific Forum and FPSB Europe, along with a professional standards committee. Due to the Covid-19 pandemic, FPSB will not hold in-person meetings in 2020, but through videoconferencing and other digital means it will continue to engage the global FPSB network in long-term strategic planning for the financial planning profession and CFP certification standards.
All of this, Gerhardt says, is important and helps assure the public that there is a professional standards-setting body overseeing the global financial planning profession and promoting standards of excellence in the public interest. Gerhardt says: "Of course, we can always do more and do better. However, I can say I am proud of the great deal that we have achieved."
The full article was originally published in the June 2020 flipbook edition of The Review.
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