Education would boost trust and lower costs

While experienced financial planners may be exempt from educational requirements in the future, it is still a worthwhile study as a minimum standard can help build client trust.

It was proposed last year that advisers who had worked in the industry for 10 years would only have to complete an ethics bridging course instead of the full educational requirements.

Speaking to Money Management, Michael Miller, financial planner at Capital Advisory, who had more than 10 years of experience, disagreed with the plans.

Related News:

Research by the Australian Securities and Investments Commission had found there was low trust in financial planning profession, which he felt was exacerbated by the lack of educational standard.

People felt more comfortable and trusting, he said, if they knew an adviser had met certain educational requirements.

“There is that hurdle to overcome before people feel comfortable with you and that takes time and increases the cost of providing advice. If people have that evidence that a minimum standard has been reached from the beginning, that removes the barrier and helps to build rapport with the client.”

In a written submission to Treasury, he added: “I support having an education standard that requires a portion of formal study for existing financial planners as well as new, so that consumers can reasonably expect any financial planner licensed in Australia has undertaken a reasonable standard of formal education. I support this standard as a reasonable effort on behalf of experienced financial planners, for the benefit of consumers and the profession”.

However, Miller welcomed modifications to the educational pathways to broaden the range of subjects related to financial planning.

This was expected to benefit those professions where financial planning was not the main task such as stockbrokers and insurers. These sectors had already raised doubts about the relevance of the Financial Adviser Standards and Ethics Authority (FASEA) to their work.

“What is being proposed is that people can still meet the educational qualifications by studying related areas such as commerce or business. This is less prescriptive now and these areas are more relevant to their jobs and something they may want to study or to expand their skills.

“Before, people were willing to do the study but they didn’t necessarily feel it was relevant or broadening their knowledge.”

Miller encouraged other planners to make their own submission to Treasury, even if they already passed the FASEA requirements. 

Recommended for you




In all my years of providing risk advice I have never had a client query my educational qualifications, let alone rely on them to establish trust. Clients very quickly determine a desire to work with an adviser based on their assessment of honesty,integrity, experience, knowledge , & evidence of a commitment to act in their best interests to achieve a favourable outcome.
If advisers are relying on credentialism to leap this “hurdle” then they probably need to work more on their soft skills to focus on what’s important to clients.

OK Boomer

Hey Riskonly, the reason none of your clients are worried about your education is because you are just doing insurance, most of them don't consider it that complicated in terms of needing a whole lot of education to do. I started out in risk and slowly moved into full wholistic advice and it is far more in depth and also rewarding, no longer focusing on trying to sell a product and trying to gain trust, my clients want to know that I have the education behind me to back up the advice I am giving them, most of my clients have degrees themselves so why would they see a financial planner who only has a diploma?

@MrHolistic, mate if you think Risk advice is simple you should probably step away from providing it. There are many intricacies in all risk products and how that intertwines with managing a successful claim, taxation and ways to reduce tax, estate planning, superannuation law etc. It is simply not a matter of "selling" a policy. I dare say many of the "risk specialists" don't even fully understand it anyway.

My clients with the most money by far have no Degrees - so you stay right where you are Holistis Advice - stick to your beliefs - go you.

Riskonly, I don't disagree. The prospective client who comes through your door sums you up based on your soft skills.

But for the prospective client who did establish contact, there are many who choose not to make contact. (Reports including seem to have this at about 25-30% of consumers who do at least make contact about advice).

Part (but not all) of the reason that they're not making contact is a perception about the quality of advice they might receive. Part (but not all) of the reason for that is driven by the low education standards that applied prior to the most recent reforms, and perhaps in part also by hearing about some of the poor client outcomes that have occurred, at times not through an adviser with ill-intent, but just an adviser without sufficient training.

Education standards could go some way to removing some of those barriers for the prospective clients who are never making contact, so you don't have the opportunity to then build rapport and trust with that individual.

Michael, I support the raising of education standards for new advisers & agree it can remove barriers to client engagement for these advisers & those building a practice. For experienced advisers & those with established practices the overwhelming majority of clients are referrals from existing clients or trusted business partners. This is preferable for all parties as a level of trust has already been established & contact is normally initiated by the adviser. It's thankfully rare to have ''walk-ins''

It's rare to have "walk ins" (that's good for me too) because the majority of Australians still think Advisers are used car salesman. People are getting their advice from the Accountant during a 15 minute tax return meeting, via Tik Tok or ringing their Superfund... I'm reminded by the walk in about 7 years ago that randomly walked in and then proceeded to yell abuse at me cause I was a "planner" and his planner some 7 hours drive away cost him money. People aren't getting advice because you're as popular as a fart in a Covid infested elevator. It's good for us planners now as I'm picking my clients but I wonder if that's a good thing longer term for us all.

All being said the biggest obstacle to clients contacting you for whatever purpose is cost
So many I talk too want to firstly know how much is this going to cost
With so many people scared of some of these outrageous costs ( and let’s be serious) some advisers think they can walk on water and charge whatever they want and that is acceptable They need to reassess their so called professional position and the value they actually provide
Some advisers frighten clients with fees and charges that you expect from a specialty doctor and the clients are told these costs before any info even gets requested
Really guys pull you heads in most of you are not that good
Try the soft approach first win the client over so they can at least be confident in your ability rather than scared of the cost
Sorry if I upset anyone But! People need an accountant because they HAVE TOO lodge a tax return not everyone has to accept financial advice !! It’s an option you need to impress on them long before cost becomes a option

are you serious? the time (and therefore cost) required to provide quality advice in accordance with the requirements of the law, regulations, and business processes of our respective dealer groups is right up there with specialist doctors. I have been to one and he only charged $600 per hour.

you are undermining yourself, and the value of other professional financial planners. if you want to undersell your services then that's up to you, but please don't tell us not to price our services with regards to the expectations we hold of the appropriate level of profit we want to achieve.

thank you,

I find the divide these proposed changes to the education reforms has generated.

On the one hand, you have those in favour of this free kick because it helps them. Most of their comments are filled with "I/me" statements - "I don't need to study." "I won't learn anything." "I can keep practicing." "This is great for me."

On the other side - seemingly the majority - you have those appalled by this proposal for what it represents. Most of their comments are about the profession as a whole, or the community, or the public.

Their perspective seems to be for the long-term improvement of advice - while those stand to benefit from these idiotic changes seem to be all about how it benefits them, and them alone.

It really is a shame that the minority want to keep holding the rest of us back because it serves their interests.

well said

It is interesting to note that writer has not referred to trust, as in the survey by ASIC in 2019 (press release 19-223MR) is mainly by unadvised Australians whereas advised Australians do trust financial advisers.

Consequently, it is the uninformed or perhaps more accurately the misinformed who do not trust financial advisers and it is disappointing that the writer joins those who do not attempt to dispel the myths widely broadcast and alternatively advance the value of advice and the professionals who provide it.

Unlike another commentator to this article, I have been questioned about my educational qualification (I was asked "are you a CFP?", actually a designation) once, in 40 years of practice.

Experience shows that prospective clients very quickly determine an advisers honesty, integrity, experience, knowledge and evidence of a commitment to act in the client's interests.

I think you are getting experience and education confused
Not everyone that does a degree is capable of client needs and wants it takes a lot of soft skills to win the clients confidence and assurance that you know what you are doing
A wall full of certificates means nothing as most client have no idea what they mean or relate to in the first place
Keeps the Uni’s I business though

I have been a financial adviser for the past 40 years, and you have to be pretty good at what you do, in order to have survived and prospered for that long. People conveniently forget that my generation were the pioneers when there was no support, except for your own brainpower and intuition. I have both the experience and the formal education, i.e., a B. Ec (Syd), graduating in 1973, at a time when, if you failed, you either had to do a supplementary or repeat the year (no adjusting the pass mark via a 2-standard deviation from the Normal Distribution). But let's not digress - I would rather take advice from an adviser who has been around the industry for the past 20 years, than someone new on the block, who has more degrees than a thermometer. The analogy I use when explaining the benefits of both education and experience, is that of building a house. The formal education provides the outer framework or structure. Over time, you then slowly fill the house with this marvelous thing called "experience". My clients pay me mainly for my street "smarts" and experience, not for all the pieces of paper that hang on my office wall and gather dust. It's always been what you do with what you've got that wins the day, with a sensible balance between education and experience the optimal goal.

you are confirming everyone's point. education first, then experience to obtain "street smarts".

education and experience go hand in hand like a horse and carriage, you cannot have one without the other.

then for the rest of our working lives to refine and extend both our education and experience to become more and more professional. the learning never stops. it never finishes, and in the wise words of a colleague, " a professional advisers education is never complete, we should always be extending and refining our knowledge to provide the best advice for our clients"

this is a once in a generation opportunity, a lifeline, a free pass, to throw our shackles off. to be professional, to be held in high esteem, to do valuable work that improves the lives of members of our own community. to be the world's best.

let's not muck it up and let our very small egos get in the way. let's maintain the high education, experience, and exam standard. unless you want to be a grandfathered accountant (secretly ashamed)

You know you can have 20 years experience AND have a current, relevant degree. It's does help. I find this pitiful last ditch arse saving exercise an abomination to our professional aspirations.

Spot on, like the taco girl says, why not have both?

Raise your hand if you ever went to a doctor, dentist, lawyer, engineer without a degree.... yep, I thought so.

This argument that the education won't provide quality only comes from the people who do not want the industry to move on, they are just looking after their best interest. The industry needs improvement in its standards and this is it. If you are not willing to do it for the industry and your own sake just get out. Experience is good but you know what is even better, a professional with credentials and experience. Stop crying for recognition and do what EVERYONE else who cares about their industry is doing. It is hard for everyone over here, you are not the only one with full time job, family, kids a d problems, we are all battling through it.

I have to laugh when I read comments comparing a noob university graduate versus an unqualified adviser with "40 years" experience. As if any amount of "experience" outsourcing the actual financial planning and SoA production can replace the technical knowledge required to provide sound advice in a rapidly changing environment. We all know plenty of advisers who have phoned it in with respect to keeping up to date with all the technical changes over the last few years. There are plenty of experienced advisers who do not have the technical chops to provide appropriate advice. The billions repaid to consumers in recent inappropriate advice remediation projects underscore that. "Experience" and technical competence are not synonymous. Both are needed - hence the requirement for the PY. And while one year of PY subservience is not a substitute for 20 years of "street smarts", we are not exactly in the business of splitting the atom, so new graduates can get up to speed fairly quickly with some guidance. A recent relevant university degree indicates that the adviser has achieved the minimum technical skill to provide sound financial advice. And please don't go on about PD continuing education - PD points are compliance joke and we all know it. Finally, study after study has shown that clients are totally incapable of judging the quality of the advice they receive and therefore default to gut feel and social cues to judge the quality and "trustworthiness" of their adviser. Confidence men throughout the ages have used this to fleece customers. Consumers should be able to rely on a trustworthy third party endorsing the fact that the adviser has achieved the minimum required knowledge to provide clients with sound advice on their life savings. That's why a relevant degree is important, at least in my opinion. The accounting profession has achieved this with the CAANZ and CPA orders. The FPA and AFA threatened to fill that role for our industry but unfortunately both have devolved into self-interested fee generating organisations hijacked by special interests and have failed to represent the best interests of our industry.

Ahh so having a law degree reduces legal fees because people trust them more, does it?

Add new comment