Financial adviser and academic Ben Neilson is five steps through a six-step research journey focused on individual and institutional barriers that exist to financial advice being easier and cheaper for people to access.
As a practising adviser with Complete Wealth in Bundaberg, Neilson has seen and addressed some of the barriers in real life. But the PhD candidate and academic in him wanted to see if there was a sound basis for how these barriers could be overcome systemically.
“I noticed that there was a massive and increasing burden to accessing financial services Australia-wide,” Neilson tells Professional Planner.
“I saw institutions in other countries, which ironically have some foothold in Australia as well, doing things much easier. I delineated the whole financial sector and came down to six increasing barriers which are completely in our control to change. Then it was effectively six separate research pieces, which should make services easier to access for all Australians, when we choose to adopt some of these findings.”
Neilson’s most recent paper, the fifth step on the research journey, examines the link between higher education standards and lower incidences of misconduct. It addresses the individual issue of professionalism and is a sharp rebuttal of the argument that “you can’t legislate good behaviour”. Neilson’s research concludes that you can.
It finds that individuals who have achieved an education standard equivalent to AQF8 or higher – a graduate certificate, for example – are significantly less likely to engage in misconduct.
It’s notable that Neilson’s research found a link between AQF8-level education and misconduct. The industry-wide minimum education requirement of a bachelor’s degree or equivalent, sets the baseline at AQF7.
Neilson says the reduced incidence of misconduct is due in part to the education process exposing individuals to issues such as ethics, but also because the experience strips away some of the things that they’ve accepted as being okay or as being common industry practice.
| Addressing six barriers to financial advice
Ben Neilson’s areas of research Individual
Institutional
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Neilson says he never bought the argument in the first place that better education does not lead to better conduct, and those who made arguments against higher education standards on that basis were misguided.
“We do it everywhere else, it’s just they didn’t want us to do it here,” Neilson says.
“We found the association with higher levels of education exposes these individuals to things that they’re not super, super comfortable with, like ethical considerations and contextualized pre-positioning and those sorts of concepts.”
Before higher mandatory education standards came into play, the qualification entry barrier to advice was RG146, made up of “four core subjects, which are very poorly designed,” Nielson says.
“Then we were walking into very complicated and conflicted advice. There’s a strong argument to say there was no ethical direction from the get-go. Like [Thomas] Edison says: we’re all born ignorant, but some of us choose to stay that way. The entrance barrier, a diploma or something, didn’t really give us the right navigational tools to be what we need to be – which is utterly professional.”
Education also helps to underline that professionalism is a deeply personal or individual issue, not an institutional one. In other words, it becomes clear to the individual that if professional standards or ethical standards are breached, it’s a problem for them personally. They can’t hide behind institutional or organisational structures.
“Because of [the] Hayne [royal commission] and because of the associated things – little things that people bitch about that are actually really powerful for our profession, like individual registration, and individual accountability and Tax Practitioners Board registration – all those things that we think are not important are actually really important, because I now am utterly accountable for what I do,” Neilson says.
“It’s my professionalism that’s on the line. We used to just be a product flogger, but now most of us have got clean clients that pay a fixed fee for services, and we’re acting like an individual fiduciary for these clients.”
There are many good points and sound arguments in this article, though what I take exception too and what this article and vested interest Education lobbyists seem to ignore, is that the vast majority of experienced Advisers, who had done thousands of hours of ongoing studies, who were held in the highest esteem by clients, had the highest integrity and who built vast knowledge, based on REAL WORLD issues that was way above anything a theory-based course could provide, were treated with contempt and due to them not having the latest degree qualification, by design, they were all to blame for the issues brought up by the numerous investigations.
Blaming the iceberg for the sinking of the Titanic, was a great way to deflect the real issues and cause and makes as much sense as saying exceptional and vastly experienced Advisers, were no longer knowledgeable, or fit to practice unless they were subjected to hundreds of hours of additional theory, that all Advisers who specialised in Wealth protection risk advice could clarify, most of it had ZERO to do with the work being performed and to THIS DAY, still has ZERO to do with the work that is done for risk advice.
The end result of NOT LISTENING to what is basic common sense anyone that stops to properly analyse would know, yet everyone chose to ignore, was for thousands of experienced risk Advisers who were the backbone of the Life Insurance Industry, to leave due to unworkable restrictions of trade that made no sense, would be a disaster and the result has been a cataclysmic failure and absolute financial chaos for ALL Australia.
When Academia or the Legal Industry get the ear of Government and become the prominent Lobbyists, the END RESULT has always been to throw common sense and workable solutions out the window to the detriment of everyone except themselves and what we end up with is unworkable complexity that has nothing to do with how the real world works, which ANY thinking person that has even a cursory examination into the state of affairs in Australia, can see that the DOERS are being smothered by the vested interest red tape brigades of theory and Legal evangelists who pray at their alter and force us to listen and pay tithing, by regulating their way to Billions of dollars at ALL our expense.
Ben has done a comprehensive study, though not comprehensive enough, as he forgets that “cause and effect” is THE most important part of any analysis.
The fact that the end result of all this brave new world of more and more Education and Legal mazes of complexity, that has caused absolute financial chaos across all of Australia and ruined hundreds of thousands of lives for NIL benefit to Australia in Wealth protection, seems to have little bearing in the thinking of the zealots of change.