Risk advisers’ license requirements should be distinct from those of financial planners providing holistic advice, according to Brian Howard, owner of Gainsborough Financial Group.
He believes the focus of the Life Insurance Framework (LIF) and Parliamentary Joint Committee on standardising educational requirements is unnecessary.
“I’ve no idea why we are not all regularly having the conversation about a separate licence for risk advisers. The qualifications upgrade being suggested is a waste of time and money for a risk adviser who, surprisingly, just wants to do risk work with mums and dads and doesn’t need the complex info re derivatives, credit default swaps and any other number of unrelated subjects,” Howard said, commenting on a recent story on the Professional Planner website.
“Where is this conversation from the dealerships that ‘say’ they specialise in risk writers?
“Most dealers are simply rolling over to the regulators, life companies and special interest groups, and it sickens me after 30 years in the industry.”
Association of Financial Advisers
Brad Fox, chief executive officer, Association of Financial Advisers (AFA), acknowledges this viewpoint but sees some flaws in the logic. He refers to specialisations within the medical profession as an example.
“It’s easy to forget that in the medical field, you do get general medical training first, then you go on to a specialisation.
“I think some [in risk advice] are talking about having a specialisation where you don’t need to pass the general level first. So they’re seeing it in a reverse context, which isn’t necessarily going to be a comfortable way for the government to see us go forward,” Fox says.
The AFA continues to work alongside its LIF colleagues, the Financial Planning Association (FPA) and the Financial Services Council in reaching agreement with the federal government over life insurance advice regulations.
“The whole discussion around professional standards is that the public, the government, ASIC, Treasury and the media are all looking for these signposts that the professional trust [in financial planners] is being earned.
“And one of those is having a minimum level of professional education standards,” Fox says.
While he dismisses the concept of separating the license requirements of risk advisers from the broader planner landscape, Fox acknowledges the value of experienced risk specialists.
Financial Planning Association
So does Mark Rantall, chief executive officer, FPA.
“This is about having baseline qualifications that mean, regardless of what specialisation you undertake, whether self-managed super or risk, you have to adhere to the law.
“You need to understand what those requirements are and you have to adhere to best practice,” Rantall says.
He believes the concept of separate risk advice licensing is a relevant discussion to be had, “around what is the appropriate risk planning education framework, and that’s something that we have done through our life risk specialisation workshops that we currently run.”
“It’s an interesting concept, but what’s important is that whatever changes are introduced, they are managed in an appropriate transition arrangement.
“We describe it as ‘respecting the past, but leading for the future’. That’s not a concept that is looking to force very experienced people to go back and retrain,” Rantall says.
The FPA also recently launched a life insurance advice guide, and its involvement with the LIF continues as it works “with government and other key stakeholders to make sure we get a sensible outcome.”
