Jeremy Wright is a registered financial planner who provides insurance advice from his office south of Sydney, but he won’t be on January 1, 2022. Wright refuses to sit the adviser exam, and is one of thousands giving up on the industry due to a confluence of events they see as overly constrictive, unfair and unworkable.
Speaking to Professional Planner, the 59-year old Wright says there are three broad reasons he is set to abandon his position as an authorised representative; an adviser exam that doesn’t cater to specialists, business restraints imposed by the Life Insurance Framework reforms and an overabundance of red tape he blames on regulators and policymakers.
“I don’t want to retire but I’m being forced to,” he says.
In a lot of ways, advisers like Wright are the reason FASEA’s education mandate was legislated. He has 34 years of experience in the industry and a stellar record as an adviser but freely admits to being underqualified in the new regime, with only a legacy RG146 qualification to his name.
Insurance advice should be separated from other advice, he believes, and insurance advisers shouldn’t have to sit a “flawed” general advice test. He is firmly against the LIF reforms and has no confidence in ASIC’s ability to objectively assess the framework in its upcoming review. “ASIC has never understood risk,” he says.
More broadly, Wright reckons the industry is heading into a dark place, with compliance and remuneration changes rendering advice impossible to navigate from a practice perspective.
“The exam itself is not so much the issue,” he says. “The issue is whether I see a future or not, and I believe it’s too complicated, it’s too hard, and there’s just not enough remuneration for the work and all the compliance we have to do now.
“If there was no exam, yes I would continue for some time,” Wright adds. “But it’s only until the next hurdle comes and we need effective university qualifications. It’s forestalling the execution.”
‘It’s a protest.’
Most of the industry has accepted the need for reform and is adapting to the changes as they come, but Wright represents a significant cohort – generally an older one – that fervently believe they’ve had the rug pulled out from under them.
According to FASEA 52 per cent of advisers have passed the adviser exam – an alarmingly low number given there is less than 12 months before the cut-off date. From a somewhat artificially inflated high of 30,000 advisers in 2019 only 22,000 remain, with the exam and degree qualification cut-off dates set to exacerbate the decline.
The complaints of these exiting advisers have some merit; advice revenue has reduced in line with the abolishment of grandfathered commissions and capped insurance commissions. The exam, while covering important areas, is ill-fitting for specialists. And, as noted by the Association of Financial Advisers, the government’s promise to reduce red tape belies a number of compliance additions that have sprung up over the last 12 months.
Wright reckons part of the problem is that regulators and policymakers haven’t been in the trenches and don’t understand the practicalities of advice provision. “There’s the world of reality and the world of theory,” he says. “The world of the theoretical has taken control.”
The other issue, he believes, is an inherent disrespect for the experience of older advisers. Reminded of FASEA CEO Stephen Glenfield’s assertion that “experience is not education”, Wright’s perspective is unshaken. “I totally reject that,” he says.
While the education mandate is Wright’s catalyst for leaving the industry, he says the plight of the insurance industry is the real reason he’s giving up.
“I’m not rejecting the exam and the code of ethics,” he says. “What I’m rejecting is the direction the regulators and the government is taking when it comes to insurance, it’s 100 per cent wrong.
Ultimately, Wright – and many of the advisers like him who are leaving the industry – would rather make a point about what they see as they dereliction of the industry than try to change with it.
“It’s a protest,” he says. “This is like a bloody communist state.”