The Council of Australian Life Insurers has recommended to the government having a Certificate IV as the baseline education requirement for qualified advisers for life insurers.
The government announced, as part of its response to the Quality of Advice Review, that super funds along with other institutions would be permitted to give scoped advice via employed staff that didn’t have the same level of education as relevant providers currently on the ASIC Financial Adviser Register.
CALI believes a Certificate IV qualification will maintain the right consumer protections and will mean team members are adequately trained to provide advice, and has not suggested this apply to other sectors like the super funds which had been the centrepiece of the reform.
CALI chief executive Christine Cupitt says customers have been urging them for a more “comprehensive level of customer service” which allows them to get answers for simple questions.
“We thought deeply about what the right level of training would be to make sure that service can be provided with our customers at the centre of what we’re doing,” Cupitt tells Professional Planner.
“To that end, we think an Australian Qualification Framework level four is the right level.”
According to the Australian Qualifications Framework, Certificate IV (AQF4) sits below a Diploma (AQF5) and Bachelor’s Degree (AQF7).
Currently, a prospective adviser looking to join the profession as a holistic adviser would be required to hold an approved AQF7 qualification.
The minister has yet to announce what minimum level of competency will be required for qualified advisers, but many within the industry expected that it would be at least diploma level, or AQF Level 5.
However, Cupitt says a diploma would take longer for people to achieve and there is a dire unmet need for advice in the life insurance space with millions of Australians with life insurance needs who aren’t able to access advice.
Diplomas generally take a minimum of a year to complete, whereas a Certificate IV can be done in six months.
“The key driver in a proposal for an AQF4 is thinking deeply about the complexity of the service we propose to provide and what an appropriate and adequate level of training would be,” Cupitt says.
“It’s drawing that link which has been at the heart of our thinking on this. It’s not something we take lightly. It’s absolutely been the centre of some deep thinking of our industry.
Cupitt says any Certificate IV qualification would be required to go through a rigorous approval process and the council believes this is the right level for the complexity of the work that done by life insurance advisers.
“Anything higher than that is going to present barriers to making sure we can take swifter action to have a workforce in place that will meet these unmet customer needs,” Cupitt says.
Reflecting on the proposal which the council says has been put to government, Cupitt notes CALI research that found in the last three months 30 per cent of Australians have thought about getting advice for their life insurance needs but only 10 per cent have done so.
Cupitt says the AQF Level 4 qualification would just be a minimum threshold with all insurers relying on further in-house training.
“The life insurers will have other legal obligations to make sure their team is appropriately trained, monitored and supervised,” Cupitt says.
“In addition to the formal qualification, there will be in-house training on the products that life insurers offer, there will be in-house training on the compliance processes and the advice processes that need to be undertaken.”
Cupitt adds there would also be continued evaluation of the adequacy of the training.
“That’s not a set and forget – that inhouse training is ongoing,” she says.
She points to an example of customer calling an insurer to ask about the difference between a three or six month waiting period for income protection. The insurer can give factual information on the issue but it may not be enough for a consumer to understand if the product is appropriate for them.
“Being able to ask some basic questions of them about their financial situation and the amount of sick leave they’ve got, the amount of savings that help navigate that decision is the kind of work we envisage being done,” Cupitt says.
The council believes this is just an extension of customer service that matches consumer expectations across different industries.
“It’s customers ringing into that insurer and that does set an expectation that the information and advice would be in relation to that insurer’s products,” Cupitt says.
“It’s also the responsibility of the insurer to make sure the customer fully understands what they can expect, that they fully understand this is not a holistic advice conversation, they fully understand the insurer won’t be comparing products in the market.”
But while those examples slip into the realm of advice, Cupitt says there still needs to be a way for insurers to refer out to independent holistic advisers.
“Where life insurers identify customers have more complex needs, there would be those referral arrangements in place,” Cupitt says.
“Financial advisers play an essential role in helping people navigate complex life insurance needs and complex financial needs in general and having life insurers play a role here is not about getting in their way, it’s about complimenting the important work they do.”
What a funny industry we are.
Always backflipping, lowering standards again and even cannibalising ourselves at times.
The JAWG working group has suggested that education going forward contain the following key elements:
• Five core knowledge areas with a further three elective knowledge areas to be chosen from a broad list that recognises different streams of financial advice. Examples of elective knowledge areas could include SMSF Advice, portfolio management and aged care.
• The ability to complete study units across multiple programs that can be supplemented by bridging units either contemporaneously or later if required.
• The curriculum is to be set and maintained by a broadly representative advisory group, including representatives from associations and academia.
Now we have CALI wanting just a Cert IV qualification introduced.
These all sound like RTOs again with tick the box education modules that were rampant post FSR and led us through the many enquiries where professionalism and education standards were held to account by the many reviews and even a royal commission, which led to FASEA education standards being imposed. Yet now we also have experienced pathways, as well as Qualified advisers and we are yet to see their education requirements.
We now have a smaller number of tertiary educators offer financial planning studies, with many already reducing their courses as a result of the experience pathway coming into play.
It’s taken the industry over 20 years to get universities to have approved and recognised Financial Planning qualifications, yet with a stroke of a pen, we have now seen such courses being closed or with smaller intakes.
Unfortunately, we have always been an industry of carveouts and grandfathering, all at the expense of professionalism and education standards.
All “carve outs and grandfathering” do is to distort the true education standards of the industry, stifle any inroads to professionalism, and allows all the regulators, and vested industry groups to decry the lack of professionalism and education standards when there is one of the many reviews that seemingly occur at regular intervals, which inevitably leads to more compliance, more regulation and in recent times, the Fasea exam and education standards, and the cycle continues.
Vertical integration, banks, sales models etc were the past main causes and who to say the future causes may still be vertical integration from the industry and super funds giving advice, or MDA providers perhaps and from the lower educated depending on what is finally approved.
The restricted term “Financial Planner etc” was brought in for the primary object was to restrict this to those authorised to provide financial advice and be listed on the ASIC register and also for consumer protection.
QAR and Minister Jones will be allowing Super funds etc will be able to provide scoped, scaled, or limited advice, if they meet the criteria above.
They will be able to use the restricted term as well or the new “Qualified Adviser “ term.
The restriction of the term should only be for those that are on the ASIC register and fully meet what was the Fasea education standards.
Otherwise, we are back to the handout of CFPs again from past times where no one can tell the difference especially the very people where the protection is needed being the consumers.
If there is a planning group created that will be factored around the experience pathway, qualified advisers, cert IV advisers etc,then they should not be allowed to use the restricted terms.
Otherwise, it will all end up like the CFPs again where we can claim the same level, but the disparity is confusing and wide.
And when there is an issue, we will be grouped as “financial planners”.
This is like Paralegals, conveyancers, and clerical staff all being grouped as lawyers.
Surely the profession can come up with appropriate categories for all the proposed subsets and separate what the restricted term was meant to be for.
By all means be a Cert IV risk something, but you cannot be a Financial Planner. Likewise for a Super fund call centre console operator.
Let’s keep the Financial Planner restricted term for those that have met the FASEA education standard so there is a level to aspire to for those that choose or want a professional pathway
This is a first step, though it needs much, much more refinement.
When any person or entity comes up with a suggestion, it must be based on big picture implications, that includes benefits and negatives.
It is no use looking at this issue from an Individual Life Insurer perspective, then multiplying that across all Insurers and saying, “we have solved the problem by employing people in house,” to sell and provide limited advice around Life Insurance.
The market is so much bigger than that small segment of people who will actually take the steps to action and start calling Insurers.
Most Life Insurance sales and premium income, came from Advisers who were able to build loyal customers who stayed on the books.
Nearly all those Advisers came from outside Industries with virtually zero qualifications in Life Insurance advice, though what they brought, was a willingness to work hard and bring their Life Experience to make the decision of working with them over the long term, an easy decision for people to take up.
These Advisers were the backbone of the Industry and as I and others warned years ago, if they get screwed too hard, they will not put up with a regime that beats them down and enforces ridiculous restrictions on their abilities to do their jobs.
We were not listened to and after twelve thousand Advisers exited and virtually NIL Life Insurance specialists have entered the Industry, at what point will everyone wake up, in that the big brave world of red tape, constant Regulatory and higher Education imposts that has effectively cut off true New Business, which has been a TOTAL disaster.
The Life Insurance Industry survives by increasing TRUE New Business and retaining existing premium income.
What we have today, is nearly three times the amount of policies lapsing compared to new policies coming on, existing loyal customers being squeezed with ever increasing premiums and another heavy hitter, a huge percentage of current premium income for the Insurers, being paid by the over 50’s who ARE going to cancel their policies within a few years due to them no longer needing cover.
So, what grand plan has the Government come up with to solve this dilemma?
They have made the provision of Life Insurance Advice, a path of torture for new entrants, hence virtually NIL new specialist risk writers having come through the University pathway.
What a great achievement and all those lobbyists who convinced Government ministers to sail down those waters, how proud you all must be, as we all watch a hugely important Industry for Australia, be consumed by rising claims, rising premiums to unaffordable levels, plummeting new business and massive lapses.
The SOLUTION has ALWAYS been to separate risk advice from Investment Advice, have specific upfront and ongoing Education pathways that are relevant to the job, make it attractive to enter the Industry, then just get out of the way, as the past “improvements” have been shown to be a total fiasco.
The CALI solution is a band aid for an amputation.
Time to start thinking big picture, or all we will see is another round of Groundhog Day.