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.”
I have already handed my AR back, I am fortunate enough to have started a succession plan though. I read writing on the wall 15 years ago an put that plan into action back then. We finally created the new entity in 2017 and while we don’t actually make a profit (yet) the future is not as dim as it might otherwise be.
What is definite though is the demise of life insurance advice. We can’t afford to do the work for the remuneration an overly zealous compliance impost. So we have reduced the volume of risk advice (in premium terms) by around 95% over the last few years. We now focus all of our efforts on building a strong and viable fee based advice business. However the ever burdensome compliance has been problematic with fees having to rise to maintain our viability. A vibrant risk advice industry is a critical piece of the puzzle , but overzealous regulators have all but killed it off.
Interestingly I note that many of the similar reforms in the UK have been rolled back because they are just unworkable and in the final analysis found to be unnecessary.
I guess like most bureaucratic organisations, ours will be slow to realise their errors, slow to admit them and even slower to correct their mistakes.
I will be following suit after 40 plus years i will be forced out on principal the so called ethics exam is afarce for risk only advisors a third is based on portfolio construction its like asking a motor mechanic to sit a exam a s doctor really none of them have ever worked for themselves or paid an overhead in their life they even have the caul to have tax payers pay accounting and relocation costs i am fed up the multiple bodies that govern our lives is a joke its a cancer killing a once great industry
Its business as usual for you Jane Hume… but there are real Australian families and a massive number of clients about to be left without advice very soon. Only half the industry have passed the exam and Industry keeps telling you and keeps giving advice the current codes are not workable which the exam is based on but yeah lets keep it.
I saw you laugh that advisers on ZOOM meeting with the FPA that we have 9 regulators and laughed that we could be audited all year without seeing one client.
We are seeing ASIC employees getting bonuses and we keep seeing things like = Regulators urged to get ‘heads on sticks’ they continue to give vague guidance on issues which we now know they have motive to do as they get paid bonuses… ASIC employees have not best interest laws to act the right way for customers for advisers.
We are seeing the heads ASIC being caught stealing money from tax payers that a couple of watches for Australia post Scotty…
I think about my little boy and breaks my heart to read a father committed suicide due to FASEA who saw no other way out, as a father I feel for the poor kid and family he leaves behind. Advisers are completing exams for Ethics yet there is zero feed back, they will not show the answers on exams, so people like this poor bloke don’t know what they got wrong or even know what to go back and study to improve. I don’t know any uni exam that doesn’t show you your results or show you what they got wrong.
I have heard about 15 advisers have committed suicide so far and breaks my heart you think its business as usual for Jane Hume. Advisers for the last three years have had unrelenting industry changes, fires, droughts, floods and COVID business shut downs. All the while running businesses and helping clients get through huge changes in investment values. When are you going to see the government need give relief to financial planners.
Business as usual Jane… might be time to show some common sense and empathy.