The Association of Financial Advisers (AFA) has thrown its weight behind calls for better transitional arrangements for existing advisers acquiring degree-equivalent qualifications, warning failure to do so could result in an exodus of experience from the financial planning industry.
The AFA's submission responding to the Government's discussion paper on professional standards in the financial planning industry warned that the impact of the proposed requirements for degree-equivalent qualifications "will cause a drastic decline in the number of experienced, quality advisers available to serve consumers through their retirement years".
"As directors of companies have best interest duties under the law, so too do financial advisers have a best interest duty under law to act in the best interest of their clients," the submission said.
It said education levels and exams would not change that best interest duty "for these highly experienced and effective financial advisers as it wouldn't for experienced directors and company leaders not possessing the degree level qualifications of their younger counterparts".
The AFA submission said it was widely documented that access to and participation rates of high school leavers in university courses was much higher today than it was a generation ago and, on that basis, it firmly believed that requiring an experienced existing adviser to achieve a university qualification would result in a significant negative impact to the operation of the industry.
"It is the AFA's preference that the government set the standards for existing advisers at the AQF 6 or equivalent assessment level in regulation as that would provide much needed certainty and clarity in the near term," it said.
The submission said that in the absence of the government being prepared to do this, the AFA would support the consensus view that the first standard includes equivalent competencies for existing advisers to be approved by the standards body.
"Older, experienced advisers who are already recognised with a strong and untarnished track record of giving quality advice, who have abided by professional association codes, and who have shown a long-term commitment to keeping their professional development current, should not be subject to unnecessary red-tape to re-validate their competence," the AFA said.
It said the prospect of thousands of quality, experienced advisers exiting early over the next three years was an extremely concerning consequence of the proposed framework if it is implemented without changes being made.
Comments
The area of grandfathering is an interesting issue, but I doubt that unsubstantiated and idealist statements are scoring any points for you cause or the industries
"cause a drastic decline in the number of experienced, quality advisers " - The whole point of increasing minimum entry requirements was an acknowledgement that the current framework has resulted in a large population of advisers that are the exact opposite?
"Older, experienced advisers who are already recognised with a strong and untarnished track record of giving quality advice" - And what is the bar exactly to meet this hurdle? You have held AR status for x years and not been subject to ASIC investigation? And if so its presumed that you are therefore "experienced and quality"?
Seriously, who actually says this thought bubble out loud let alone puts it into a Govt submission? Even the property lobby would blush at that little gem.
Dear BB,
I am an experienced adviser with nearly forty year's experience.
I was twenty years of age when I started in the life insurance industry. It was going to be a "job" until something better came along. Forty years later, nothing better has.
I love helping people. To stay in this industry, I became CFP qualified. That was after completing my Diploma in Financial Planning when it was eight subjects. Since then, I have completed the CFP Ethics unit. I also completed the Diploma in Life Insurance through the ANZIIF, many years prior to DFP.
Many of my clients have benefited from my advice. Whether that be a Widow, Widower or child who lost a parent & the life insurance made them financially more secure. The retiree who has more than the Age Pension to support them. The disabled on long-term income protection claim. The cancer, heart attack, MND, MS.. the list goes on... of those paid out under trauma. The young person who three days before Christmas and couldn't "afford" my advice, that I supported by accompanying to a local food bank when she too "shy" to ask for help herself. Not the first time I have put the client first, long before Best Interest Duty came into being.
How dare you imply that I am not qualified to give that advice!
I serve my community through volunteer service with organisations.
Most of clients are (or were) self-employed prior to retirement. I don't believe I do a better job of providing them with advice than I did 10 or even 20 years ago. Frequently I receive comments along the lines of "we can't believe how much crap you have to go through and give us" to implement what they see as straight-forward.
Yes, I have seen rogues in this industry & support everything to weed them out. When I see roguish behaviour, I report it.
BB, you might also be a good person ( I like to think that I am). But please don't make disparaging comments about people whom may not have a degree to add as post nominals or hang on the wall.
It is how you live your life and conduct yourself that really matters.
"Older, experienced advisers who are already recognised with a strong and untarnished track record of giving quality advice, who have abided by professional association codes, and who have shown a long-term commitment to keeping their professional development current, should not be subject to unnecessary red-tape to re-validate their competence," the AFA said. I find it quite ridiculous, that ultimately any financial planning body would justify different qualification based partly on age. Experience is understandable however these 'older' advisers can have credits for their relevant experience, as would any university entrant looking for recognised prior learning. This is not at all something new.
When we have gotten to the point in Australia, that minimum qualification levels are based partially on age or it even discussed, and we are only placing burden on 'young' advisers for reaching higher education standards we are not being fair nor equitable in our legislation.
Letting anyone off, is no more than failing. It is discriminatory to say 'older' as way of exception. It is well documented the mature age discrimination in Australia in terms of employment, however it is not acceptable to go the other way.
What are the standards the ‘AFA’ is proposing?? What would they expect of you are 45 but have 15 years experience but your young, so maybe you should go to Uni or your 55 and have 8 years but you get the ‘golden ticket’ as you qualify as one of our ‘older’ participants. That is simply madness. If there is definable level of experience that qualifies a reduction in further learning, that should apply to all or no one, young and old. Discussions of age are never acceptable, merit, experience, qualifications, audit are all variables that can be assessed.
Other that Kaplan, or CPD's what continued development what could they possibly mean by keeping their personal development current, if you have only attained AQF5?? I believe if you cared about advancement AQF5 would not have been where your qualifications had ended.
The timeline is just a finalisation on a 3-4 year long process. The writing was on the wall and anyone who was grandfathered should have seen that and got moving with their study. To now lobby against it smacks of further resistance which is not consistent with many of their stated aims of being the best advisers around. The extra education will make you a better adviser and you've had plenty of time to get started and sorted. Sitting and waiting for member lobby groups to save you some study time which was in your interests, is a cop out.
'Old Fella'
"How dare you imply that I am not qualified to give that advice!" I never stated that, you implied that not me. You serve your community as a volunteer, you take your job very seriously. Great! no one questioned that. Unfortunately, you have to take a step back old fella and look at the question objectively, when you do you see that your response, while very personal and emotional has very little to do with the issue at hand and the question I posed.
My point was 'What is the standard to which you decide who does and does not meet exemption requirements' if its based on some notion that simple time in the industry + no ASIC action then you are suggesting a system that is no more stringent than today, you are building and exemption that circumvents the very point of implementing an increased education requirement to begin with.
What of the person who has been in and out of the industry for many years, started selling insurance and never really stopped, did the minimum education requirements required at the time and has done little since. Should they be automatically eligible for the same exemption as you because they happened to be around for 20 years. And because there competence has never been bad enough to warrant an ASIC order then lets just presume they are "quality" advisers. As someone who also has many years under their belt in this industry such a presumption is 100% BS.
Let me turn your question around (not directed at you personally) "how dare someone imply they are an experienced, competent and quality adviser just because they have been around for x years and no one has sued them". That presumption of competence is exactly how we ended up with an industry free to employee thousands of individuals with qualifications less onerous than those of hairdressers..... and guess what old fella, they are free to use the same title on their business card as you.
Now, one of your representative bodies is calling for that to continue! Be dammed those that have put time and effort into maintaining and increasing their qualifications over the years. Because the adviser with years of formal education, professional years and ongoing CFP is just as competent as the adviser who worked as a part time risky for 20 years.
Let me use another example, No different than handing out CFP designations like cornflakes and then turning it into a full qualification. "how dare people refer to themselves as CFP when they never had to complete the education requirements that others had to". For those in the know its has (will continue to take) years to work off that stigma.
In relation to your last point about CFP grandfathering, I agree it's a problem and firmly believe it has devalued the CFP designation and hamstrung the FPA's push for greater professionalism. (The FPA should be advertising that "All CFPs have completed a degree, extra postgraduate level study, and passed a rigorous exam". But they can't say this because of the grandfathers who haven't. Instead they can only use waffle like "highest standards of professionalism", which means nothing to the general public, and can't be differentiated from all the other waffly marketing claims out there.)
However I don't think it has to take years to work off the stigma. It could be fixed overnight by the FPA saying that grandfathers have had a good run using the CFP designation, but it ENDS NOW!! Grandfathers should be reclassified as AFP members until they complete the required studies and pass the exam. If the FPA continues their policy of waiting until all the grandfathers retire, the CFP designation will be devalued for another 20 or so years at least. That is ridiculous. Unfortunately the previous FPA CEO went out on a limb defending this approach, but with a new CEO and Chairman, and heavy pressure from regulators on educational standards, now is the perfect moment for the FPA to call time on grandfathered CFPs.
Spot on. Unless there is a wholesale change to the designation the journey to professionalism will continue to be a long, drawn out road. If I hear 1 more old lifey say that they did their DFP "back when it was 8 subjects and meant something" I'll go mad. You know a degree is 24 subjects and a Masters is 12 right?
Add new comment