Much has been said recently about what the future holds in terms of the education requirements and qualifications necessary to meet the (Professional Standards of Financial Advisers Act) 2017.
To be considered a financial adviser, you will to pass an exam before January 1, 2021, and by 2024, you will need to have completed one or more courses that the Financial Adviser Standards and Ethics Authority (FASEA) has deemed the equivalent of a bachelor degree or higher.
Financial Services Minister Kelly O’Dwyer writes that the new standards body will be “responsible for governing the conduct of professionals in the financial advice sector, by setting mandatory educational and training requirements, developing, and setting an industry exam, and creating a Code of Ethics that all advisers will be required to adhere to”.
Since the GFC, there have been more than 50 inquires, reviews, and major consultations. Common feedback I receive is that there is a degree of reform fatigue and we would all welcome some political certainty. The professional standards legislation has the potential to have the most significant and long-lasting impact on the recent industry reform agenda.
Every adviser I talk to is committed to ensuring that our profession receives the recognition it deserves in helping people, creating trust, and giving clients a sense of personal wellbeing and empowerment, or as adviser Peita Diamantidis puts it, “helping our clients create dreams”.
So much has been dictated to advisers about the path to professionalism, imploring them to ‘come on the journey’ and ‘adapt to change in a changing environment’, and I totally agree it’s time for everyone to adapt to change. But that’s everyone, not just advisers.
So, what does adapting mean? A quick definition is: To make something suitable for a new use or purpose.
Now our children have access to laptops, iPads, smartphones, and other new age devices and get their news via Google, Facebook and BuzzFeed. Yet when we assess their academic competence – the qualifications that will be relied upon to determine their entry qualification to specialised courses and future career paths – we lock them away in an exam room, remove all their day-to-day devices and tools, put pens in their hands and expect them to sit an exam in what is a completely unnatural environment by today’s standards.
It’s the same when they go to university. Years of study and then they’re assessed in the traditional way. It’s no wonder many thoroughly competent, professional advisers are thinking they can’t go back to school! Why? Because there is an assumption that sitting for an exam in 2021 and attaining degree equivalency in 2024 may require performing in an unnatural environment, like it does today.
The FASEA board is on a tight timeframe to put the detail into the professional standards legislation and provide existing advisers certainty as to what they need to do to meet the new minimums. However, the new standards also need to set a clear signpost to the next generation of financial advisers. This signpost needs to serve as a shining beacon of what our profession stands for and reflect the attitudes and behaviours of what the community is seeking from a financial adviser. This is where I see the greatest opportunity to adapt.
I attended a seminar recently and the presenter was Sue Suckling, who is chair of the New Zealand Qualifications Authority (NZQA). The board represents industry, community and education interests. Suckling referred to regulators as the “hand brake to innovation” and challenged the traditional thinking around what degree qualified means and what it will look like in the future:
- What will a qualification look like?
- The currency of the qualification?
- What does qualification mean?
- Is it up to date?
- How will we assure quality?
I know advisers who have highly credentialed graduates in their practice and are sitting in appointments with advisers wondering what on earth is being discussed. It is imperative then that despite the tight timeframes ahead for FASEA, we use the professional standards legislation as an inflection point to rethink and redefine what we want to learn and put into practice. As a profession, we have much to gain by forming an industry-wide collaborative approach to the knowledge, attitudes and behaviours of a new advice competency framework. The Association of Financial Advisers is well underway with landmark research that will help inform an industry consensus view.
We are all having to adapt. This requires us to question the effectiveness of continuing to do the same things in the same way that we have always done them. We are being forced not only to adapt our business models, but also to challenge what has made us successful in the first place.
This is a defining characteristic of financial services professionals. Our mindset is future orientated, the advice we provide is future orientated. Your clients’ hopes and dreams are future orientated.
Financial advice is being reinvented so that the best of today is blended with the best for the future.
We see the AFA’s role as critical in not only helping advisers adapt to a changing world, but also ensuring the professional standards of the future are adapted and, therefore, “suitable for a new use or purpose”.
Phil Kewin is chief executive of the Association of Financial Advisers.
