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SA needs more certified financial planners, says institute

South Africa’s financial planning sector has reached an important milestone – it now has more than 5 000 individuals who are entitled to use the Certified Financial Planner (CFP®) designation.

But relative to SA’s GDP and population size, there are still too few of these professionals to serve the needs of South Africans.

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This is the view of Lelané Bezuidenhout, CEO of the Financial Planning Institute of Southern Africa (FPI) – the only professional body locally to offer the internationally recognised CFP® qualification.

Read: SA’s financial planning industry hits 5 000 certified professionals

“Having said that, there is a promising pipeline of more than 1 000 new candidates working towards becoming CFP® professionals.”

Financial planning as a career in SA is still in its infancy. “It is only 50 years old.”

The profession has started trending among graduates, which is positive, as an inflow of new talent is crucial for ensuring the continued growth of the profession, she notes.

Bezuidenhout concedes that not all consumers necessarily need the service of a certified financial planner.

“If you require a single product – say an education policy – a financial advisor can help with that.”

Lelané Bezuidenhout, CEO: Financial Planning Institute

Planner vs advisor?

“I would say the difference between a financial advisor and a CFP® is that the latter is trained to look at a client’s financial needs holistically – financial management, retirement planning, and estate planning. In addition, they also have tax expertise by helping to reduce clients’ annual tax liabilities while still complying with the law.”

Financial advisors have a stronger focus on products, she says.

Code of conduct

The FPI takes the integrity of the profession very seriously and thorough screenings of prospective candidates are done.

“In one instance, a candidate was rejected after it was discovered that he had been involved in the 2021 looting incidents. There was a photo of him on the internet where he tried to put a television in his car.”

(In July 2021, widespread unrest and looting took place in KwaZulu-Natal and Gauteng, which led to billions of rand of damage to private businesses, especially the retail sector.)

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CFP® professionals need to adhere to a strict code of conduct. “This provides an extra layer of protection to the consumer,” Bezuidenhout says.

Requirements

She stresses that not everyone is cut out to become a certified financial planner.

A good understanding of the psychology of financial planning, strong people skills, and the ability to “read a room” are required, she says.

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Read: Estate planning – Why do you need it?

Besides exceptional interpersonal skills and emotional intelligence, candidates need to hold either a postgraduate diploma in financial planning, or a BCom Honours. In addition, they need to have relevant work experience of between three and five years.

To be officially certified, they need to have passed the FPI Professional Competency Examination.

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Bezuidenhout says initially only the University of the Free State was offering a postgraduate diploma in financial planning (one of the requisite qualifications to be considered as a candidate), but more tertiary institutions have come on board – the University of Stellenbosch Business School, Milpark Business School, University of Johannesburg, and the Nelson Mandela University to name a few.

“We rely heavily on our universities for the pipeline of new candidates.”

Tied or independent?

Asked if SA’s certified planners prefer being independent or tied – the latter referring to a professional who is employed by a large corporation and is only allowed to promote the products and services of a single company – Bezuidenhout notes there is an equal split.

The tied CFP® professionals often move between the big corporates – from “blue to red or green”, she said in reference to some of SA’s major insurers.

“The ones who join smaller firms follow a career pathway by becoming a para-planner, for example, and then a senior planner and then a director. Or a few of them come together and start a company, bringing a diverse skill set to the table.”

The industry is dynamic and some certified planners who have worked for smaller firms sometimes decide to rejoin the ranks of the big corporates.

Younger professionals 

An “interesting” trend in the financial planning landscape is that the average age of certified planners is dropping, Bezuidenhout says.

“In the past, they were on average around 45 years, but it has come down to 40 years.”

Although the profession has been growing in appeal among women, there is still a significant gender imbalance, with 1 728 female planners compared to 3 273 male certified planners, Bezuidenhout notes.

“We have come a long way, but there’s still work to be done to make the industry more representative. We want the industry to be inclusive of diverse people with diverse mindsets.”

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