Opinion - Education fears real and justified


By Don Trapnell

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As 2017 draws to a close we are running headlong into a new adviser education environment, something that is striking fear into the hearts of many risk-focused financial advisers.

And with good reason. Central to this fear is whether the impending education requirements will force these advisers to study aspects of the financial advice process they are not engaged in – ie financial planning and investments.

My very real fear as a licensee is that some of the more senior advisers will leave the industry because they cannot see themselves becoming tertiary qualified. We have done nowhere near enough to support these people and as an industry and as a country we can’t afford to let them go.

Last week, I celebrated 50 years in the life insurance industry. Over this period I have come to see how vital education is to the success of a thriving financial advice industry.

Times change, as do the needs of consumers, so it is absolutely necessary that education standards are robust and move with the times.

The challenge is to get the balance right. We don’t want to push technical education so far that we end up with a very well-educated, technically excellent financial advice industry that doesn’t know how to interact with its own market.

We need life insurance advisers who have the necessary soft skills – yes, selling skills – to remove the artificial barriers put up by consumers to avoid buying life insurance.

This is because life insurance is a grudge purchase. People do not want to be reminded that they are in fact mortal and that if something were to happen to them the financial survival of those closest to them may be at risk.

It is only by engaging with consumers that we can break down barriers. Facts and figures will never bring people to the realisation that they need the protection that life insurance products can give them.

On a fact-finding visit to the UK in April 2015, I discovered that commissions were not removed as a form of payment to life insurance advisers in the British market because there was an acknowledgement by the corporate regulator of just this phenomenon.

It is also a concern that many of the problems that have occurred in the Australian advice industry over the past decade or so have not been due to a lack of formal education and yet part of the response to these problems has been to advocate for higher and higher education standards. Is this not confronting a challenge with the wrong weapon?

In October, the AFA unveiled its ‘Financial Advice Competency Framework: An Industry Consensus’ and identified a number of skills that the industry agrees make advisers competent. To name just a few, these included the following, which could arguably be described as ‘soft skills’:

Client needs – “Being able to correctly identify a client’s needs by being present and flexible when listening to the client’s concerns, goals, values and beliefs, helping them to articulate their needs.”

Trust, or connecting with people – “Understanding the role of trust within their client and professional relationships including understanding what trust is, why it is important and how it can be managed.”

Personal values – “Understanding the role of personal values and personal conduct in the provision of financial advice including showing genuine care for each client’s welfare and future, demonstrating personal integrity, honesty, empathy, respect, maintaining confidentiality, keeping promises and acting proactively.”

These are relevant skills. Let’s not make it even more difficult for highly experienced advisers to stay in our industry, or for people to be attracted to a career in advice, by insisting on education qualifications that are not relevant.

If we do, there will ultimately be fewer advisers servicing fewer people – and that translates to a lose-lose situation for advisers, for consumers and for Australia.

Don Trapnell is a director of privately owned dealer group Synchron

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