I can’t remember where I heard this – so if it was you, apologies for the lack of acknowledgement, and please let me know – but in a recent presentation someone made the point that when we come to a bridge we don’t stop our cars, get out, check the engineers’ calculations and seek a second opinion before driving across.
We trust that the engineers and his or her peers know what they are doing, that there are checks and balances in place within the profession and in the processes within the engineers’ own firms, and that a body of professional knowledge based on hundreds of years of experience and expertise means that our journey across the bridge is very likely to be completely safe.
We might not consciously run through that checklist but we make a mental short-cut because we trust professions and professionals. We know and understand that it takes quite a bit of effort to break into a profession (once it’s established); it then requires a considerable effort to stay in it, and that practitioners adhere to high professional and ethical standards.
A profession develops a deep body of knowledge on which its members draw and to which they actively contribute. And once we accept an occupation as a true profession, then the advice and counsel provided by its practitioners is necessarily trusted.
That’s where financial planning is headed, step-by-step, and that’s why the timing of a release recently by Sydney University was so puzzling. It reported the results of research that found financial planners are quite adept at “manipulating” clients, who cannot tell the different between good advice and bad advice.
The research led to calls for “higher qualifications and standards for financial advisers.” There’s two things to say about this.
On the road from nowhere
First, the research was apparently carried out in 2014, by the Australian School of Business at the University of NSW. The release last week came from the University of Sydney (to where one of its authors has since recently moved). Calling for higher standards and qualifications might have been timely in 2014, but to make the call today just seems odd.
It’s as if the university doesn’t know there has been significant debate about this issue over the past two to three years, and as if it doesn’t know that there’s draft legislation setting new education, ethical and professional standards that is still expected to be introduced to the parliament before the end of the year. It seems pointless to call for higher standards, because higher standards are happening already. So a question is: why call for them now?
And if the “can’t tell good advice from bad” line sounds familiar, it should. It was the central theme of a retirement advice shadow-shopping exercise published by ASIC in March 2012 – two years before the UNSW research. That ASIC report has helped to inform policy debate and legislative reform in financial planning ever since. So again: why issue the results of research that is two years old, that overlooks extremely relevant recent developments, and which, in any case, picks up on a theme that predated the research by a further two years?
Manipulation – good and bad
The issue of manipulation is interesting too. If by “manipulating” the researchers meant “advising” or “convincing” or “explaining the benefits of” certain actions, then fine. But it’s hard to think that’s what they meant. The context of the release makes it clear that the researchers think financial planners are not to be trusted, and that they prey on uneducated or unsuspecting members of the public.
My GP often gives me advice on what I should do. Generally I do it (if not always as quickly as she might like), but she has to present a good argument and so she uses her training and professional knowledge to “manipulate” me into doing what she thinks I should do.
I really can’t tell good medical advice from bad medical advice (as a rule of thumb, if it’s not going to hurt then it’s “good”) and I can only really tell after the results are known, but my starting point is I trust she has my best interests at heart, and that her advice is good. That level of trust and acceptance is the hallmark of a profession.
It’s the combination of the “Dr” before her name and the alphabet of qualifications and accreditations that follow which help give me confidence.
“One of the things we were able to do in this experimental context was measure the impact of a certification and we found that displaying a qualification made people more willing to follow advice than they otherwise would be,” one of the research authors said.
That’s good, isn’t it? It’s kind of the point of certification and qualification. Robust certification (not some Mickey Mouse cereal-box thing) and relevant qualifications are essential in establishing a professional’s bona fides. That’s why research conducted and published by a professor is more likely to be accepted and perceived as credible than research produced by – well, by me, say.
Curiously, the University of Sydney does not currently offer a financial planning bachelor’s degree. Maybe it should – this research suggests that would not be a bad idea. That’s smart marketing.
But in the meantime, releasing outdated research does a disservice to everyone – including other universities – who have already done a mountain of work setting better, higher and tougher standards for financial planners’ right across the board, and creating the foundation for a real, trusted profession.
