‘We do it everywhere else’: Education lifts standards

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.

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.”