It’s been a turbulent year for Stephen Glenfield, and he’s the first one to admit he didn’t expect taking up the mantle of chief executive for FASEA to involve so much scrutiny.

“It’s been more intense than I probably thought, but I learnt fairly quickly that came with the territory,” he says.

Taking over as head of the Financial Adviser Standards and Ethics Authority was never going to be easy. Glenfield picked up the role in late August last year after the previous CEO, Deen Sanders, left to join Deloitte. At that point FASEA had released draft guidance and received industry consultation, but was yet to release any legislative instruments or its standards blueprint.

The importance of both FASEA’s legislative instruments and its blueprint for advisory standards can’t be understated. For advisers, the standards promised a path to professionalism but a massive intrusion on their working lives. For the government that handed FASEA its mandate, the standards were a necessary step to raising standards and restoring faith in an often maligned, yet crucial industry.

It was a steep challenge for Glenfield, then, to grab the baton and keep running. A lot has been done since Glenfield took up the role; the first batch of exams are completed, advisers are studying towards their relevant degrees at one of 30 approved providers, and some budding planners are already on the second half of their professional year.

It hasn’t all gone smoothly, with the delayed delivery of its standard blueprint a clear misstep that put many advisers offside. He is also very conscious that the FASEA’s effectiveness won’t be measured for years to come, and incremental wins are easily forgotten.

But the ball is rolling. “We’re in the operationalising stage,” Glenfield says. The job now is to “bring to life” the legislative instruments and promote them so advisers know exactly what they have to do, he says.

“It’s also about providing guidance ahead of the code monitoring bodies coming into play,” Glenfield continues, noting that in November the government will appoint the groups responsible for policing the ethics principals laid down by the authority. Glenfield is well versed in policing standards, having worked in financial services regulation for over three decades, most recently as a general manager within the Australian Prudential Regulation Authority. Both FASEA and APRA are lightning rods for criticism from their relevant sectors.

He says he’s very much aware of the invective that comes his way, and doesn’t ignore it.

“I tend to read criticism and think about whether there is any merit in it,” he says. “I look for merit and if there’s any way I can make change… But I don’t let it get to me personally, I’d like to think

I’m pretty resilient.” Glenfield’s leadership style throughout the standards rollout has been starkly different from his predecessor. While the academically-minded Sanders was open to discourse, and gregarious, and would gladly postulate on the intricacies of professionalism, Glenfield is a much more restrained and methodical character. True to form, he diverts questions about himself back to the work.

“When I came in, we were at the heart of setting the legislative framework and I was conscious of the need to progress that work under the framework of the Corporations Act,” he says. “But yes, it’s been a measured approach.”

THE THREE THINGS ADVISERS MUST HAVE

The first batch of adviser exams in June marked the point where FASEA’s education standards took effect, and the industry looked on keenly to see how the 600-odd participants would fare.

At the Professional Planner licensee summit in June, Financial Planning Association chief executive, Dante De Gori, asked Glenfield if he had a number in mind for how many advisers would ideally pass on the first attempt. “No,” Glenfield says. “It’s not about the numbers.”

Professional Planner’s September cover

In the end, over 90 per cent of advisers passed, a result Glenfield described as “a positive”.

The purpose of the exam, he says, was to test competency. There was no specific number of advisers the authority wanted to cull – the job was to “set a fair exam that was meant to challenge”.

“The exam tests three things that you’d expect all advisers to have; it’s their practical application of the law, the understanding of ethics in their business, and understanding of the client. You would expect all competent advisers to know those things. To have such a good pass rate on the first one probably reflects that knowledge,” he says.

Over 1000 advisers have signed up for the next batch of exams around the country in September, a number which is expected to swell considerably before registration closes. Another 600 are already scheduled for December so far, he reveals. Glenfield says he is encouraged that advisers are getting on the front foot and lining up early to get their exam requirement completed before the January, 2021 cut-off date. “It’s a positive that advisers are moving to meet the requirement rather than holding back,” he says.

Holding back may also prove problematic. There is an exam scheduled for December, 2020, with the results unlikely to be finalised by January 1, after which any adviser who hasn’t passed the exam will technically be unable to provide advice. It’s a major wrinkle in the program Glenfield says they are yet to iron out.

“We’re actively trying to figure out how we can make that work,” he says. “We are very aware of it.” For advisers that fail an exam, FASEA is offering guidance on the areas they need to improve.

At the licensee summit Glenfield was asked if a exam puts pressure on licensees to reassess adviser competency. Then, as now, he believes that is something for licensees to judge themselves. But he does have sympathy for the advisers that stumble out of the gate.

“The one thing I would say is that not everyone is going to pass on the first go and that may be nerves, it may be not being used to doing exams, it could be any number of things along with not knowing their stuff. The licensee is in a better position to judge than me,” he says.

Pressed on whether the cut-off date for the exam should be pushed back to match the two-year window that was promised to the industry by then finance minister Kelly O’Dwyer, Glenfield is adamant that the standards authority will not campaign for a legislative amendment.

“We don’t lobby government for change,” he says. The late delivery of the education standards blueprint – which meant advisers only got 18 months to complete the exam – is a black mark on FASEA’s program. Glenfield, however, won’t be drawn on whether the Authority’s tardiness should lead to an amendment of the cut-off date.

“We are takers of legislation and we operate within that legislation,” he says.

DEGREE OF CHANGE

FASEA’s education standard, which deems that all advisers must have an approved degree or equivalent by January, 2024, is the single biggest time and cost incursion for advisers, and when the blueprint was released many of those advisers railed against the requirement.

Time seems to have mellowed the dissenters, now, as most have buckled down to bridging courses and degree units.

Glenfield reports FASEA has approved “close to 30” bridging courses, and the number of advisers signing up to them is strong. “I’m really pleased with where we’ve got to and I’m happy to see advisers signing up and getting involved,” he says.

A major bone of contention around the degree requirement has been the amount of recognised prior learning (RPL) allocated to existing attainments. In particular, many FPA members were disappointed their Certified Financial Planner (CFP) designation only received two units of RPL towards an 8-unit degree after being sold on it as the highest level of accreditation for advisers.

According to Glenfield, CFP holders weren’t slighted. In fact, they were given as much credit as they could possibly receive. “In terms of giving credit based on the sort of credit you’d expect at the university level, we set a maximum of 2 credits RPL for professional designations,” he says. “The FPA got the most that we were going to allocate.“

THE TOTALITY OF THE STANDARD

At Professional Planner’s Best Practice Forum in July, world-renowned ethicist, Peter Singer, commented that while FASEA’s 12 ethics standards are largely appropriate, standard three – which deals with conflicts of interest – is flawed. This came after the Association of Financial Advisers’ head of policy, Phil Anderson, called the standard on conflicts “impossible to manage”.

The standard in question essentially says advisers cannot “advise, refer or act” if a conflict exists. In the explanatory note it says that while advisers won’t breach the standard for merely recommending products their employer offers, they will if a variable part of their remuneration depends on it.

As Singer pointed out, a grey area exists where recommending an employer’s product leads to indirect payment in the form of salary increases. “What if it puts you in the good books with your employer?” he asked.

According to Glenfield, they’re both forgetting one thing; the code applies to the adviser, and nobody else. “It’s not a code written for the employer or anything outside the individual adviser,” he says.

The adviser needs to take responsibility, he explains. They must “stand back and assess whether there is anything in their remuneration that is inducing them to do something that is not in the best interests of the client”.

Glenfield says there are a lot of people trying to read “standard by standard”, instead of looking at “the totality of the standard”.

“It doesn’t necessarily all fall to standard three,” he adds. When you look at standard three, you also need to take note of the rest of the code, which means acting with integrity and in good faith.

“We have a series of values that advisers need to meet that are all-encompassing and go over the various standards,” he says.

THE LONG GAME

Glenfield says he knows that FASEA’s impact will not be measured now, but in “five, 10, 15 years’ time”. He believes the advice industry is trending towards the same shape as the medical profession, whereby FASEA qualifications are akin to being at a GP level for doctors and some choose to then specialise in areas like insurance, estate planning and SMSFs.

“Ultimately, what you’re looking for is a minimum or base standard for every adviser, and then if you choose to specialise you can.” This is the inverse of what often happens now, Glenfield explains.

“It’s an industry where a lot of people have specialised before they got to the general part of it,” he says. “And that’s been part of the challenge in setting the standards.”

Glenfield believes the role of FASEA will evolve after 2024. Exams will need to be continually prepared for professional year students, he says, and the standards will need to me “maintained and reviewed”. Part of FASEA’s mandate is to step back to see if it has achieved what it set out to achieve, he notes.

“Markets will inevitably change, products will change and the way people work will change, so those standards will need to keep pace with all of that,” he adds.

As the chief architect of change in the advice industry over the last year, Glenfield has come to accept there will always be resistance.

“The natural reaction when people ask you to change is to say ‘well, I like what I’m doing’,” he says. “But I think we’re starting to see some change in that.“

The payoff, he reckons, will be an industry that can call itself a profession.

“If someone goes to see an adviser after the transition period they will know the adviser has met a minimum level of education, been subject to a professional year under good guidance, sat an exam that proves they can practically apply what they know, they’re continuing to maintain their knowledge base through CPD requirements, and they’re operating under a legislative code of ethics which helps guide their behaviour towards the best interests of the client,” he says.

“That’s got to be a very good position for the advice community going forward.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
One comment on “Exclusive interview: FASEA’s Glenfield on a defining year for advice”
  1. I am really pleased at Mr Glenfield’s stance on anumber of things, most outstanding is:
    For advisers that fail an exam, FASEA is offering guidance on the areas they need to improve.

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