Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Divisive experience pathway proposal plan ‘upset’ FAAA members: Abood
Financial Advice Association Australia chief executive Sarah Abood revealed just how deeply the government’s proposed ‘experience pathway’ has divided the industry, explaining how the controversial plan took a personal toll on herself and the association’s membership base.
Speaking at the FAAA’s inaugural roadshow event in Sydney as a unified group consisting of Association of Financial Advice and Financial Planning Association members, Abood (pictured) said members were effectively split down the middle on whether or not to support financial services minister Stephen Jones’ proposal to exempt advisers with ten years’ experience and a clean record from meeting the relevant degree requirement for advisers.
51.9 per cent of members supported the move while 49.1 per cent were against it, according to an FAAA poll. The FAAA’s executive team “didn’t love the proposal, but could live with it”, Abood explained, and when the survey results revealed a virtual deadlock it became clear that members were similarly torn on the issue. “That’s a very difficult position… as your association, to know what’s the position that you want us to take to Canberra,” she said.
The main contention splitting members, and the industry at large, is whether the proposal finally recognises the value of adviser experience, or whether it waters down hard-won steps to professionalise the industry. Advisers who already sacrificed time and money to meet the relevant degree requirement within the allotted timeframe are additionally frustrated that those who didn’t are now essentially being given a free pass.
“I know this is very difficult,” Abood said. “I get calls almost every day, emails almost every day from members. There’s so much pain, so much division on this one. It actually really upsets me, as I know it upsets many members.”
To gain more clarity on the issue, the FAAA asked members if two significant amendments to the proposal would cause them to change their mind and vote ‘yes’.
The first of these was to add a 10 year ‘sunset’ clause to the exemption so that qualifying advisers wouldn’t continue to practice for up to 30 years without a relevant degree. The second was a requirement for advisers taking the pathway to complete a mandatory ethics unit of study, which the proposal also exempted.
“We did ask some additional questions because we know that this is going to happen,” she said. “The minister has very clearly signaled the experience pathway is going to happen, so we asked if some changes were made, could that ‘no’ turn into a ‘yes’.”
The result, Abood recalled, was that 70 per cent of members indicated that the two amendments, if taken up, would meet their approval. “And that’s why that’s our position,” she said.
