For the past couple of decades, the financial advice or financial planning industry has been on a path to becoming a profession. The status of profession is what advisers craved, and what consumers deserved.
It has not been a simple task. To create a profession, a set of qualifications and standards had to be created. There had to be agreement within the profession itself that those qualifications and standards were tough enough to make it a real achievement to enter and then to stay in the profession.
Critically, the qualifications and standards had to be recognised by the public as imposing upon professionals standards of education, professionalism and behaviour (including ethics) that set them apart. Otherwise, the whole would have been a monumental waste of time.
It’s been a painful process. Advisers have had to pass an exam, and many have had to begin the task of upgrading education qualifications to university degree or equivalent. The higher standards have driven thousands of individuals out of the industry, creating the supply issue that the government is now trying to fix.
As part of the process, two terms – financial adviser and financial planner – have been made protected terms, enshrined in legislation and available only to those who meet the onerous professional requirements.
Perhaps we should have seen coming what’s happened this morning. Maybe the first hint was when the education qualifications were undermined by the introduction of an experience pathway, which effectively regards experience as a like-for-like replacement for formal education.
Today’s truly farcical situation probably shouldn’t be such a surprise. Under measures announced by Minister for Financial Services Stephen Jones today, individuals who are explicitly and specifically less qualified than financial advisers and financial planners will be not only able to offer advice to the public, but also to call themselves “qualified advisers”.
You can’t make this kind of stuff up.
It’s not clear if the government is using the term to describe the educational qualifications these individuals will need to hold. If it is, it’s a stupid and insulting term to use. If it’s using the term qualified in the sense that the advice delivered by these individuals will be qualified, as in not complete or limited, it can only lead to confusion among consumers.
It wasn’t that long ago that Jones was defending the decision to allow super funds onto the advice field with individuals who don’t meet the same education or professional standards as financial advisers by pointing to the obligations of a fund’s trustees to act in the best financial interests of their members.
This was an obligation, Jones noted, conspicuously absent in other financial institutions – such as banks and insurance companies. Now he’s proposing to open the field to those very institutions, and to allow their representatives to call themselves “qualified” advisers.
“Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters,” Jones said this morning.
“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.
“And on qualifications, as the name suggests, they will be required to meet a Government-mandated education standard.
“The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance to be less onerous than the requirements for professional advisers.”
A diploma. Why not just reinstate RG146 and really put a cherry on top.
Jones himself may have hinted at the sorts of conversations this package could lead to when he told a media briefing on Wednesday that “when [a consumer’s need] tips the balance and goes over to something which is more comprehensive, more bespoke, there will be a requirement the qualified adviser says ‘I’m sorry, I can’t provide that advice. You’ll have to go to a qualified professional planner to receive that more comprehensive advice’.”
Professional Planner has supported the development of an advice profession since day one of its existence. It’s why the publication was created. We’ve supported the push for higher education and professional standards. We’ve supported the idea that individuals who meet these standards have earned the right to call themselves professionals. Central to this has been the development of appropriate qualifications.
We’ve also believed more needs to be done to allow more people to access advice more easily and cost-effectively. But to now open the doors to individuals who do not meet these standards and call them “qualified” is not only disappointing. It is also a slap in the face of the emerging advice profession, and of dedicated individuals within it who have done everything asked of them to jump through hoops to gain the necessary qualifications.
Quantity at the sacrifice of quality.
I was looking for a reduction in the onerous paperwork for paperwork’s sake and freeing staff up to support a client’s real advice and personal needs.
I am not quite sure how people are so incensed about this. The previous recommendation by Michelle Levy suggested unqualified persons could provide this advice. This latest iteration is suggesting that these persons must have a qualification, so they will be a “qualified” adviser, to some degree. When reading the treasury report, I didn’t take it to mean they will be called “qualified advisers” where the current advisers will be called something else. When it comes down to it this is a way for Australians to get access to basic, limited advice. I personally am happy that these people need to have a qualification of some sort. Assuming they are called something else (like “product adviser” for instance, what other solution does the Professional Planner recommend to make advice more affordable for Australians instead – if this approach is a slap in the face?