‘Pretty easy fix’: Jones open to dumping qualified adviser tag

Minister for Financial Services Stephen Jones has expressed willingness to drop the term “qualified adviser” while addressing the chairs of the country’s major super funds in Melbourne.

Jones released the full government response to the Quality of Advice Review last year – dubbed the Delivering Better Financial Outcomes package – which will allow institutions including super funds to employ “qualified advisers” to give advice, albeit at a restricted level despite what the term “qualified” might otherwise suggest.

The qualified adviser title has been a point of contention for the advice profession, which believes it undermines the capabilities and status of professional advisers, who are held to higher standards of education, ethics and behaviour than the so-called “qualified” advisers would be.

Speaking at the Chair Forum in Melbourne on Wednesday night, hosted by Professional Planner sister publication Investment Magazine, Jones acknowledged the qualified adviser term is likely to be changed, but praised the overall legislative framework laid out for the advice and super sectors.

“We’ve set out a framework, [there’s] a bit of excitement amongst the adviser profession around nomenclature – if that’s the biggest problem we’ve got then it’ll be pretty easy to fix,” Jones said.

“I think the framework is right: a bigger role for funds, ensuring that we’ve regulated appropriately for risks.”

The comments preceded those of Financial Advice Association CEO Sarah Abood, who similarly confirmed direct acknowledgement from the minister that the name isn’t “set in stone”.

“We’re pleased the minister has let us know that the term is not set in stone and alternatives will be considered during the next phase of consultation,” Abood said at the PritchittBland Communications New Year kick-off event in Sydney.

In Melbourne, Jones said the super industry has done a good job at growing members’ wealth, but the current flaw in the system is inadequate retirement income solutions to maximise super’s benefit, which the Retirement Income Covenant is meant to solve.

“Whether that’s a sophisticated retirement income product [or] an account-based pension or however it is we need to be able to ensure we’re doing that,” Jones said.

Bracing for impact

The government’s response to the QAR in June last year included the announcement that super funds would be granted more freedom to give advice.

The move has been controversial with advisers worried about whether there would be a level playing field, despite the super sector not uniformly being interested in giving more financial advice.

Jones said the feedback he is receiving from funds suggests there is a spectrum of appetite for giving advice.

“What’s coming back to me is some of you [funds] just want more certainty around what you’re currently doing or want to do, where the legislative boundaries are uncertain, around the information sessions that you’re providing or some of the simple advice [you’re giving],” Jones said.

He added this was reflective of funds with younger members who have less complex advice needs, while funds with an older average demographic want to be able to give more bespoke advice because their members have higher balances and more complex needs.

“There are some funds that will say ‘we don’t want to do this ourselves, but we’d be interested in forming a relationship with another service provider’,” Jones said.

Happy anniversary

The conversation at the forum came on the eve of the five-year anniversary of Kenneth Hayne delivering the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry to then-Treasurer Josh Frydenberg.

“The royal commission didn’t come out of nowhere – from a political point of view it came out of the best part of a decade [of] issues being brought to the fore and then being batted away,” Jones said.

“Across the sector, the denial there was any systemic issue at all… I don’t want to see a repeat of that. Particularly in a sector we care so much about, and we think there is so much good in, we want to ensure that service and the members individual experience with the fund they belong to does not become an Achillies heel.”

Jones said while the royal commission might be a “distant memory for most people” and he has accepted some winding back of layers of regulation, he hasn’t forgotten why the commission’s recommendations were put in place.

“There’s a regulatory pendulum and we’re at one point in the regulatory arc and it moves in accordance with what’s going on politically and economically,” Jones said.

“We’re at one point in the arc and if you’ve been around a couple of decades, as many of you in the room have, you’ve all seen that pendulum move.”