The Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) have been meeting with other industry associations, including those which have been critical of advisers, for more than a year to shape discussions around the education and professional standards of advisers.
The six-member group – which represents advisers, SMSF and industry super funds, banks and consumers – includes the AFA, FPA, SMSF Association (SMSFA), Industry Super Australia (ISA), Australian Banking Association (ABA) and Choice, despite the fact that some of the groups have been critical of each other’s actions and members in the past.
The presence of the six-member group was stated on a number of occasions in submissions made by the AFA and FPA in response to the release of the draft professional standards legislation in December 2015.
Those submissions also stated a further ‘consensus submission’ had been jointly compiled by the six associations and submitted to the Treasury but has yet to be made public by the group.
FPA, General Manager Policy and Conduct, Dante De Gori said the group and the submission viewed the issue of planner education and standards at high level while individual member associations made more detailed submissions covering areas that were relevant to their members and were of ongoing concern.
According to De Gori, the group formed just over a year ago to examine how to respond to the recommendations of the Parliamentary Joint Committee (PJC) and Financial System Inquiry (FSI) regarding adviser education and professional standards.
“Unlike other areas, this was not as controversial, and we all agreed do work on these issues and for the past 12 months have had open dialogue which resulted in a joint position on the professional standards framework,” he said.
According to De Gori the group reached consensus on the key issues of education requirements for new entrants into financial advice as well as adherence to codes of conduct and ongoing training for all advisers and how existing advisers should be transitioned to a new standards system.
“We agreed there should be a framework for new advisers…but there was no support in the group for requiring existing advisers to attain a degree level qualification”
“We agreed there should be a framework for new advisers and details of that still need to be worked out but there was no support in the group for requiring existing advisers to attain a degree level qualification,” De Gori said.
“However, we did agree there should be a transition model with further study but that should be left to an independent body.”
SMSFA, Chief Executive, Andrea Slattery said the association joined the group as it agreed with the common premise that consumers needed to be served by a profession in the area of financial advice.
Slattery stated the involvement of the Federal Government via the draft legislation meant it has become involved as a co-regulator with industry and the six-member group was asked to discuss how this co-regulation would work and how it would meet the objectives of the PJC recommendations.
“It was an opportunity to work with other groups, without factions and with the same goals, and because we have been involved with raising standards and building a profession, particularly around advice specialisations such as Self-Managed Super Fund (SMSF) advice,” Slattery said.
“People need to be competent to provide advice on a range of areas in financial advice but all parts of the advice sector need to be a profession, which is why we have agreed that a minimum education standard for new entrants is an undergraduate qualification, and then to go beyond that if necessary.”
De Gori said despite the different backgrounds and members of the six associations it was important to have discussions with them and have groups like Choice and ISA ‘in the tent’ before the legislation was finalised.
“We wanted to understand their concerns and have them understand ours which should lead to better progress and outcomes on the issues. It is better to have these conversations in a friendly environment than after the fact and without context,” De Gori said.
I would only like to say one thing about this article – improving education standards will not guarantee unscrupulous adviser activity. In fact, history has proven on numerous occasions that is often the most educated people who rort the system, not the average industry professional that has contributed years of good service and advice to whatever his chosen field may be. Making experience professional advisors jump through a range of education hopes for the sake of compliance alone, is a useless exercise in my opinion. There are a whole lot of overeducated derelicts in this world.
I agree with ‘PURE Risky’. I too am a ‘pure risky’ and can see a lot of government employees and ‘boardmembers’ and ‘consultants’ from special interest groups making a big thing of having older advisers jump through hoops. Invariably this sort of agitating by these creatures is only to get a name for themselves in their little kingdoms and justify their existence. Hand on heart, after 32 years devoted to my clients, I can say that having to sit extraneous exams to make clerks happy will not help me or my clients one iota.
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I also know dozens of other advisers who are ‘old lifeys’ and would give up their weekends in a heartbeat to serve a client if asked. These people KNOW their clients and have their VERY best interests at heart and have for decades. Sitting ridiculous exams on derivatives, CD’s, currency laws and other irrelevant subjects will do more harm and ZERO good.
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To advise on risk products we should have a specific licence – distinct from an investment adviser. The current system of licencing does a great disservice to risk advisers. Until the govt idiot clerks (including taxpayer funded ministers and their ilk), special interest groups and ‘associations’ wish to provide for that the please, truly, with the greatest respect P**S OFF and let the REAL risk advisers do their jobs WITHOUR distraction or interference! PLEASE!
After reflecting on this over a period it’s now clear to me what’s been happening and is happening. Life offices have wanted to lift profits and be back in control where they used to be in the days of tied agents. That’s been their agenda all along. But that’s too obvious and would make them look like villains. So what story (read “smokescreen”) have they spun?
They have, with government cooperation, purported to be concerned that advisers weren’t
delivering appropriate advice to the insuring public. With the flimsiest of excuses they’ve created the biggest wave we’ve seen in the life-risk industry in all my years in it.
Now the powers-that-be have ramped up compliance so much that most of us now can only see clients 20% of the time because the remaining 80% is taken up with training, compliance and SOA preparation. Most are completely over the top and clients don’t read them anyway. On top of that we have Best Interest Duty which basically repeats what SOAs are designed to do.
Finally and worst of all, now they’re cutting commissions. The government at the behest of the life offices has legislated this. Is it even legal? That question hasn’t been tabled, but is worth repeating: Is any of this legal and could it be challenged? The result to us is grief from both ends – less potential income with even less time to generate it.
Earlier this week I noted petrol prices had taken a price hike. I wonder if the oil corporations have to justify this to the government? By contrast we have to detail and justify every single fee/commission we earn.
Sadly, as a group we have no political clout and effectively no real voice so the government at the life offices’ urging has wiped the floor with us.
We’re the losers as is the insuring public and we’ve done nothing to effectively counter it.
Real good points Paul. An independent body with real advisers and real workers is required. Advisers need to get together and establish a party with a real voice from independent dealer groups.
Thanks for your kind remarks, Dirty SkillZ. We have to make the best of a bad situation but it needn’t have been with less greed from the life offices.
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