Financial Planning / Wealth Management

New standards for financial planning profession

by Chris Johnson

Lynn Pi, executive director, certification, Institute Financial Planner of Hong Kong

Individual investors in Hong Kong are beginning to see how the advice of a Certified Financial PlannerCM can provide them with long-term benefits

Few industries in Hong Kong are currently enjoying the high-speed rate of growth being experienced by the financial services sector. At present, institutions of all types are expanding their range of investment products, increasing headcounts and boosting training budgets in order to meet the demands of a new breed of investor. This is because people in Hong Kong, no longer able to rely on spectacular annual returns from the property or stock markets, are now looking for the best long-term returns on their capital and realising that the expert advice of a professional financial planner will help them achieve this.

This represents a notable change in investment practices and has brought with it a new professional certification - that of the Certified Financial PlannerCM or CFPCM - which was largely unknown in the local market as recently as four years ago.

"In 2000, a group of financial planning practitioners and academics saw the trends and felt it was important to establish the profession more firmly by introducing the CFP certification," recalls Dr Lynn Pi, executive director of certification for the Institute of Financial Planners of Hong Kong (IFPHK). "It is the predominant certification for financial planners in North America and is gaining increasing recognition around the world."

Right timing

The major challenge was to establish the concepts, set standards and then train professionals in the skills of personal finance, market knowledge, ethics and presenting objective recommendations to help clients meet their foreseeable financial obligations. "The CFP mark was launched at the right time," says Dr Pi. "People now understand more about retirement planning and the risk and return relationship. They see how professional advice can help them to manage their resources and assist in value creation."

Achieving the certification is based upon what the IFPHK calls the "four Es", namely education, examination, experience and ethics. Using the results of a job analysis of industry professionals, the institute designs the exam syllabus and corresponding curriculum. The resulting six-module programme is currently offered by four local universities on a part-time basis. Emphasis is placed on understanding the financial planning process for clients and knowledge of core subjects. These lead from the foundation of financial planning through insurance, investments, tax, retirement and estate planning to a final case study module in which a complete financial plan must be put together.

Complete coverage

"All the essential components of personal finance are covered and our aim is to ensure students really have a good understanding of the different subjects," says Dr Pi. "Typically, each module requires around 40 hours of class time and is completed by a three-hour final exam conducted by the respective university."

The second step towards obtaining the CFP mark is to pass the 10-hour certification exam spread over two days. Passing is competency based, not determined by a quota or certain percentage of the total number of candidates.

Next, candidates must acquire sufficient years of qualified work experience in the financial planning industry. They must also agree to comply fully with the IFPHK's code of ethics before applying for the award.

So far, there are around 1,200 qualified CFP professionals in Hong Kong and another 860 candidates will take the certification exam in June.

In Dr Pi's opinion, the CFP certification is fast becoming recognised and respected in the financial services industry and more importantly, by the public. "It is a sign of professional competence and an ethical approach to business," she says. "We are determined to build the CFP community in Hong Kong and establish financial services as a 'real' profession."

Taken from Career Times 07 May 2004
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