Most financial advisers have paid scant attention to aged care and are ill-equipped to answer questions on it in the FASEA exam, according to Assyat David, co-director at Aged Care Steps.
David, whose firm provides training and accreditation services on aged care financial advice, says the Financial Adviser Standards and Ethics Authority’s practice exam shows their intention to test advisers on their knowledge of the area – something she believes the majority are unprepared for.
She notes that the practice exam’s first question is a case study involving a client seeking advice on behalf of their elderly mother regarding moving into aged care.
“Most advisers are ill-equipped to answer this question because they have routinely placed aged care advice in the ‘too hard’ basket, which means there is a very real risk they will fail the FASEA exam,” David tells Professional Planner.
Existing advisers need to pass the FASEA exam by 1 January 2021, while new entrants to the industry will need to do so between completing their approved degree and commencing the second half of their professional year.
David reckons “around 80 per cent” of advisers will struggle with the exam. She says that Aged Care Steps has had “over 1850” advisers attend the Aged Care Steps accreditation, and while some may have undertaken other training the vast majority would not have had specialist education in aged care.
The reason, she expects, is that aged care is not particularly useful as a distribution channel for products.
“The majority of advisers have chosen to ignore aged care as an area of advice because they have not yet been able to transition from a product sales-based industry to a true advice model,” David says. “Many struggle to implement a business model which is truly fee for service based, which aged care advice is.”
She says advice firms typically have a single representative chosen to act as the subject matter expert, with the remaining advisers “switched off from learning anything about aged care advice”.
“This practice exam shows that now all advisers will need to invest in gaining knowledge of aged care issues to be able to support their clients.”
David explains that the aged care case study in the practice exam goes to the heart of best interests and ethics obligations, which FASEA is keen to test advisers on.
“Often the adviser may be dealing with the child of the person needing care (the client), who is the decision maker,” she says. “However, ethically the adviser needs to act in the best interest of the person going into care (the beneficiary of the advice) – who often they do not meet. There may be a conflict between the best interests of the decision maker and the beneficiary of the advice which the adviser needs to address adequately.”
David says that licensees “have an obligation” to address aged care knowledge and training for their authorised representatives. She also references the ongoing Royal Commission into Aged Care Quality and Safety, which is bringing new awareness to the issues involved. “It’s going to mean there are more and more people looking into aged care,” she says.