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Making a connection is at the heart of any financial adviser’s value proposition, the consultant says. But to do that, the right language must be leveraged to understand what a client’s legacy values truly are.
Experience pathway to perpetuate poor advice industry image: FPA
The government’s proposed experience pathway risks undermining the advice industry’s standing and ultimately turning people away from the profession according to the Financial Planning Association.
In the FPA’s submission to the proposal to exempt advisers with 10 years of continuous experience and a clean record from the relevant degree requirement, it argues the change could wind back the original intent of the education standards – to ensure that all advisers met a minimum education benchmark – and consequently befoul trust in the profession, both from consumers and prospective advisers.
“We believe unassessed experience alone is an insufficient foundation to meet the objectives of raising the minimum education requirements for professional financial advice providers and continuing to build consumer confidence in the profession,” the submission states.
The amendment is a short-term fix to a long-term problem, the FPA argues. A survey of its adviser members showed 90 per cent had either completed the education requirement or are on track to do so, with only a slim margin realistically eligible for the exemption.
Speaking to The Inside Adviser, FPA head of policy, strategy and innovation Ben Marshan (pictured) says most advisers who weren’t going to meet the education mandate have already left the industry. “There are some that were going to leave anyway that might get a year or two more, but the vast majority that were going to leave before 2026, they’re all gone.”
Students could be turned off a career in advice by the perceived lack of professionalism, the association fears. “Our members are concerned the proposal will actually worsen adviser numbers over time by making the profession less attractive to new entrants,” the submission states.
For existing advisers, the amendment subverts the work they’ve done reaching a common standard.
“Members have let us know in no uncertain terms that they feel the proposal undermines the commitment they have made to professionalism to win the trust of consumers,” Marshan says.
A “critically important” omission in the proposal, Marshan argues, is the lack of any sunset clause, which could see advisers without relevant degrees operating for decades.
“If a tertiary qualification is perceived to be no longer a requirement to practice and there is no date by which it will be, we can no longer tell young students they will be joining a trusted and respected true profession,” he says. “We don’t want this to go on forever.”
Reputational damage could wind back the industry’s efforts to rebuild its image in the wake of the Hayne Royal Commission and associated scandals, he adds.
“The longer advice is seen as a hack job and unprofessional the harder it is for the industry to attract students into it,” he says. “In reality the industry is significantly more developed these days, but there’s still a view out there.”
There are ways to fit experience into the professionalism framework, Marshan says, that engender trust and don’t come at the expense of education. The problem with the (now defunct) Financial Adviser Standards and Ethics Authority that set up the standards, he says, was that they took an “education or nothing” approach. “We’ve always acknowledged that you need experience,” he adds. “An experience pathway makes sense.”
Sacrificing the education mandate and the perceived level of professionalism that comes with it, he believes, plus an unknown quantum of future advisers, to accommodate a handful of underqualified advisers makes a lot less sense.
