Some financial planners wouldn’t recognise a conflict of interest if it were sitting on their desk with a sign saying “I Am A Conflict Of Interest” hung around its neck. There’s a pocket of the industry that lacks critical thinking skills – not surprising for a small segment that has been spoon-fed what to think and what to sell by financial institutions and product manufacturers for so long – and combines that with a thick seam of ignorance.
It’s a potent and potentially destructive combination. It means they can’t see conflicts of interest in plain sight, but see conflict and conspiracies everywhere, even where there aren’t any. It undermines the process of raising standards and lifting adviser qualifications, calls into question the personal integrity of those involved, builds on an established tradition of financial planner-as-victim, and fuels the entrenched public narrative of financial planners as resistant to standards of any sort.
It’s much more difficult to think critically than it is to cook up a conspiracy theory and shift the blame elsewhere. But that’s the risible state of what passes for debate on higher education standards as the industry waits for their arrival.
Is that a bit harsh? Maybe it is, but the depth of stupidity in the discussion of this issue is breathtaking. Arguments borne of guesswork, half-truths, misconceptions and outright lies need to be replaced by a simple recognition that minimum education standards for financial planners are going to be raised.
Just the facts
By January 1, 2024, all new and existing financial planners will be required to hold a degree or higher qualification, or equivalent, approved by the Financial Adviser Standards and Ethics Authority (FASEA). If you’re still arguing against the proposed minimum standard for an individual to be allowed to practise as a planner or adviser, then you’re like that soldier who hid in the jungle for three decades, unaware World War II had ended.
It should also be fairly clear that the new education standards weren’t set by FASEA, or any of the directors who sit on its board. The standard was set by the government, in legislation, in response to the abominable actions of sections of the industry over many years, which had undermined trust and confidence in what could be a highly respected and noble profession.
No, the standards didn’t come from the Financial Planning Association (FPA), or any other association in the sector. And they certainly weren’t set by universities or other education providers. But in the current febrile environment, any links between any of these entities are seized upon as proof of a conspiracy to somehow destroy financial planning, by setting standards so high that many advisers just won’t be able to meet them. It’s so mind-numbingly tedious and predictable, and deeply disappointing during a period of change that, if mishandled, could set back the cause of professionalism by years.
This all started when the industry realised the importance of practitioners being degree qualified as a necessary step towards recognition as a profession, but then saw no universities were offering financial planning degrees.
Nobody else looked likely to do anything about that, so in 2011 the FPA took on the challenge and formed the Financial Planning Education Council, to create a national curriculum for university courses. Then universities had to create the courses and everything that goes along with that. It was a long and painstaking process. The first university course was accredited in March 2013, at Griffith University. So there has been a nationally recognised standard curriculum for financial planning degrees, and therefore a list of FPEC-approved degrees, for almost five years now.
If all of this took place without some advisers knowing it was happening, or how or why, or what it means now, then it is quite difficult to know what to say about the lack of engagement and general awareness of industry issues that reflects.
It was an entirely pragmatic decision for FASEA to adopt the FPEC’s accreditation standard until FASEA comes up with its own (which could end up being the same as the education council’s anyway). It was also natural – and wholly proper – that the FPA supported FASEA’s adoption of the FPEC standard, given the association’s role in establishing FPEC, how well established that standard is, how many universities had taken it on, and how many students were already enrolled in FPEC-approved courses.
Bear in mind, also, that universities are self-accrediting institutions, which means that they are allowed to create courses and assert that those courses meet the requirements of the Higher Education Standards (HES) Framework. Essentially, if a university says a course complies with the HES Framework, it amounts to the same thing as being regulated by the Tertiary Education Quality and Standards Agency.
Some financial planners may not have heard of TEQSA. Every organisation that offers a tertiary education program must be registered with it. Its website states that its essential functions include: registering regulated entities as higher education providers and accrediting their courses; conducting compliance and quality assessments; conducting re-accreditation assessments of courses developed by providers without self-accrediting authority (that is, basically every non-university provider); providing advice and making recommendations to the government on the quality and regulation of higher education providers and so on. So the FPEC-approved financial planning degrees are fair-dinkum degrees and meet all of the standards an independent regulator has set.
If you reckon a university could adopt the FPEC curriculum and skirt around both the HES Framework and TEQSA, that’s one thing. But if you add in the idea that the FPA or some other entity could then prompt the government to create legislation that mandates degree or higher, or equivalent, education standards, and conjure FASEA into being to enforce those standards, all with the express intent of doing advisers down, then the Conspiracy-o-Meter needle truly has gone off the dial.
The problem with conspiracy theories
There’s no conspiracy in the Minister for Revenue and Financial Services, Kelly O’Dwyer, appointing to the FASEA board a group of directors whose individual expertise is directly relevant to the role of the standards authority. A conflict might arise if a director stands to gain, personally and exclusively, as a result of a particular FASEA decision, but we’re a long, long way from anything like that.
There’s no conflict of interest in the FPA supporting FASEA and FPEC and higher education standards in general. The FPA ceased to be an education provider years ago and stands to gain nothing from advisers undertaking university degrees – except enjoying a more highly qualified membership.
The suggestion an association that is funded entirely by membership fees would actively set out to drive those members out of the industry, thereby putting its own financial viability at risk, does not stand to reason.
The problem is that nonsensical arguments and theories unsupported by evidence muddy the waters of the debate that should be taking place; namely, how new standards can be set and introduced to raise the qualifications of all advisers while producing the least pain and disruption. Those are real issues. Imagined conflicts and conspiracies are not.