Adviser education must not ignore EQ

New adviser standards must not ignore emotional intelligence

28-Aug-2017

By Daniel Paperny

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The Financial Adviser Standards and Ethics Authority (FASEA) must not ignore the significance of emotional intelligence (EQ) when formulating mandatory educational requirements for the next wave of advisers, according to outgoing Centrepoint Alliance chief executive John de Zwart.

De Zwart, who announced his retirement last week after four and a half years heading the advice group, told financialobserver he welcomed the incoming educational standards regime for advisers as a necessary step to bolster the professionalism of the sector.

But he argued that assessing an adviser solely on their technical competencies risked ignoring key skills in such areas as EQ and behavioural psychology that are equally important and offer potential for the industry to attract candidates from other disciplines and graduate pathways.

“Is that effectively what we really want and the cost of that? Because you might get a really technical adviser, but by the time [a candidate] has gone through this process, in 2024 most of the advice is probably going to be done by a machine,” de Zwart said.

“Our ambition at Centrepoint Alliance always came from the belief that Australians need access to good quality financial advice and that financial wellbeing is absolutely critical to what people value … it’s about [the role of] advisers helping to remove the fears, the risks and complexities of financial issues in people’s lives.

“We’ve seen that in some of the lobbying of FASEA that’s occurring at the moment, there’s this sentiment that you need to be degree-qualified in a ‘relevant’ degree, which I just don’t think is as relevant anymore.”

Under the incoming regime, new advisers will be required to hold a relevant degree before they are eligible to commence a ‘supervision year’ and to sit the mandatory exam set by FASEA.

Existing advisers will have until 1 January 2021 to pass the exam and until 1 January 2024 to reach a standard equivalent to a degree.

De Zwart said ASIC had played a significant role in driving cultural change and clamping down on poor practices by industry participants in the sector following the introduction of the Future of Financial Advice reforms in 2013.

“They’re finally getting the resources that’s been necessary [for them] to get involved in businesses at a level and using resources like artificial intelligence or data mining to identify poor practices out there in the industry. That’s actually helping to clean the industry up, from a behavioural [standpoint],” de Zwart said.

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