A new Standard for Personal Financial Planning

The standard will specify the ethical behaviour, competences and experience required of a financial planner and enhance the transparency and efficiency of the process. BS ISO 22222 Personal financial planning – Requirements for personal financial planners, codifies best practice in financial planning across the world and will help to increase consumer confidence.

With 14% of the population having purchased products through Financial Advisers, they are the single most important channel for distributing financial products in the UK. Furthermore, life and pensions products account for 50% of the UK savings and investments market making the UK by far the largest market for these products in Europe.  However, one of the major issues reported by consumers when seeking financial advice is uncertainty over whether they can trust their financial advisers. And, with the vast amount of investment schemes and financial planners for customers to choose from, they are often confused about where to turn for advice on planning for retirement or how best to invest their savings.

Personal financial planning is a highly fragmented market, with at least 24,000 Independent Financial Advisers providing services across the UK. Mike Low, Director of BSI British Standards, said: “BS ISO 22222 plays a crucial role in addressing this by providing an internationally accepted benchmark which enables consumers to identify financial planners who possess the right knowledge, skills, ethics and experience to deliver the desired level of service.

“BSI is proud to have represented UK interests in the development of this standard to ensure it meets the level of independence, technical excellence, competency and professional conduct expected both by industry and consumers.”

BSI is also developing a guide to the standard “BS 9222:2006 Personal financial planning — Guidance on the application of BS ISO 22222 and assessment of compliance” to provide UK-specific information on the application of the new standard. Used in conjunction with the standard, this application and assessment guide will enable financial planners intending to seek accreditation to tailor their use of the standard to the requirements of the UK financial environment. It is anticipated the Draft for Public Comment of the guide will be available in April 2006.

-ENDS-

Notes to editors

BS ISO 22222 specifies the requirements for performance, assessment methods and continued competency which a planner can achieve by following training programmes and maintaining a record of these. The standard also provides a framework that covers all aspects of the personal financial planner’s ethical behaviour and specifies the requirements, content and length of experience they must have. It is applicable to all financial planners regardless of their employment status.

The standard defines the six steps of the personal financial planning process to provide clarity for the professional and increase transparency for the consumer:

1. Establishing client/planner relations – including a written record of the scope of the relationship, the planners qualifications and experience, and full disclosure about conformity to the standard
2. Determining goals and gathering data – such as household asset liability and cash flow, statements, legal documents, economic assumptions, immediate needs and others
3. Evaluating the client’s financial status – written outline for client of strengths and vulnerabilities, compared with goals, plans and restrictions
4. Developing and presenting the financial plan – a written list of suitable and usable recommendations relative to the outcomes of the previous steps of the process
5. Implementing recommendations – planner can assist directly or indirectly with implementation and provide documentation where necessary
6. Monitoring the plan recommendations - provide documentation as to the status of each recommendation e.g. acceptance, modification, completion.

Learn more about ISO 22222

To purchase a copy of BS ISO 22222:2005 Personal financial planning – Requirements for personal financial planners or to pre-order a copy of the guide BS 9222:2006 Personal financial planning — Guidance on the application of BS ISO 22222 and assessment of compliance, please contact BSI Customer Services by phone +44 (0) 20 8996 9001, fax +44 (0) 20 8996 7001
Price: ISO 22222 £52*, £26 BSI Subscribing Members (Hard copy) or £52 + VAT (Electronic PDF download) Buy the standard at the BSI Shop
BS 9222 £30, £15 Subscribing Members (Hard copy)

BSI - BSI British Standards is the UK’s national standards body, working with government, business and consumers to represent UK interests and facilitate the production of British, European and international standards to meet economic and social needs.