Feature: The ‘sleeping giant’ of educational standards


By Jerome Doraisamy

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Incoming professional standards legislation and educational requirements for advisers will start on 1 January 2019, heralding a new era as the industry increasingly moves away from its product-focused beginnings towards a more holistic delivery of services for clients.

Existing advisers will be given until 1 January 2021 to pass new examinations under the regime, with a deadline of 1 January 2024 at which degree-equivalent status must be attained.

Mentor Education managing director Mark Sinclair believes the new reforms are integral to helping extend advisers’ knowledge base and ensure they are truly acting in the best interest of customers.

“You can’t be a holistic financial planner or adviser if you haven’t been exposed to certain knowledge areas – to uphold the duty of care to clients, your advice offerings have got to be holistic,” Sinclair says.

One person who has been through the new standards of degree-focused study is industry newcomer Sean Condell, of Sydney northern beaches-based boutique firm Condell Financial, who tells financialobserver that undertaking advice-focused tertiary study offers an extra level of understanding he could not have gotten by learning on the job.

“The more specialised and industry-specific financial planning degrees are, the better,” Condell says.

“It’s going to be better for the client in the end because they are going to get people who know what they are talking about.”

A fundamental educational gap in qualifications has meant many advisers currently in the profession are not up to date with new legislative provisions and are relying on acquired knowledge to drive their conversations with clients.

One way planners will be better placed to have more informed conversations with clients is through the introduction of specialised elective subjects, which will help finance professionals upskill and become experts in relevant practice areas.

“It’s pivotal to be able to say, on a business card or resume, that you have majored in a particular area – whether it be intergenerational wealth or digital marketing – as it is something that will help in not just attracting new clients, but having a deeper level of engagement with them,” Sinclair says.

Condell adds these tailored subjects can help advisers gain a greater appreciation for the technical nuances of areas such as superannuation law.

They also directly helped him recognise how the industry operates and the nature of advice being given to clients, he says.

Ascent Wealth Management adviser and winner of this year’s Assocation of Financial Advisers (AFA) Excellence in Education Award Steve Nielsen agrees, saying the potential opportunities with upskilling mean such electives could be more than just box-ticking.

“There is a great opportunity for advisers to take on aspects of the educational curriculum and make use of it to evolve their practice offerings to clients and how they do business,” Nielsen says.

“Psychology and emotional intelligence, for example, can help advisers understand what drives client behaviour and what makes them more receptive and open to participating in advice, which would be of practical assistance to an adviser embracing education to improve both themselves and their businesses.”

The government recently confirmed continued moves toward higher standards in the industry, announcing the professional standards legislation will be introduced to Parliament before the end of the year.

FPA head of policy and government relations Ben Marshan welcomes the proposed reforms, pointing to the new professional standards body in particular as a way through which industry associations could continue to advocate for higher levels of quality advice.

“The reforms will provide financial planners with clarity and appropriate transition times to adjust to the new professional landscape,” Marshan says.

“The establishment of an independent standards board is positive as its sole focus will be to raise overall minimum standards, which will in turn rebuild consumer trust and confidence in the financial advice profession – we are keen to work with the board and contribute to the next development phase.”

While reform may be moving at different paces in educational institutions across the country, there is a sense among those on the ground that more stringent qualifications will help improve the quality of advice as a whole and increase trust and confidence levels for consumers.

“Having a financial planning degree as a barrier to entry for less-studious, less-qualified or less-dedicated people can be important, given that clients put a lot of trust and faith in advisers, and since their life savings and life insurance needs are in play, you can understand why the minimum requirement should be more difficult to attain,” Condell argues.

“It’s the same in other industries, such as law and accounting, and financial planners should be held to the same standard.”

However, Nielsen points out it is important as the government progresses with the new standards that it ensures processes do not become too convoluted and hinder progress.

“The ultimate aim of increasing professional standards is to encourage and give consumers the confidence to seek advice,” he says.

“If anything is done to overcomplicate the process or slow it down, it will be to the detriment of giving clients the confidence to seek advice they need to improve their own lives.”

AFA general manager of member services, partnerships and campus Nick Hakes says ultimately advisers should view the incoming legislation as an opportunity rather than a threat as it is the “sleeping giant” that could drive demand for advice among the 80 per cent of Australians who do not currently have a relationship with a financial planner.

“There is untapped demand for financial advice and education can be a driver for that advice, serving to increase demand for it, which is why we should embrace it rather than walk away from it,” Hakes says.

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