Has FASEA invoked the Nuremberg defence on adviser exits?

The Financial Adviser Standards and Ethics Authority (FASEA) chief executive, Stephen Glenfield, has responded to strong questioning during Senate Estimates about the likely outflow of financial advisers from the industry by reinforcing that the authority is simply implementing legislation as it is required to do.

Queensland Liberal Senator, Amanda Stoker, directly challenged Glenfield on whether FASEA “acknowledged the risk of losing an awful lot of experienced financial advisers for whom doing a full eight-subject graduate diploma late in their careers is just too much, too expensive and, quite frankly, too disrespectful to the role they play in the culture of the profession?”

Glenfield said that FASEA’s was implementing legislation that came from the Parliament and that the authority did not go beyond that.

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Senator Stoker also noted that the number of advisers on the Financial Advisers Register had decreased from nearly 29,000 at the start of this year to around 25,500 as at the beginning of October.

“I would suggest this is a significant drop that we can expect to see continue to decline over the next year or so as an unreasonable approach to valuing [continuing professional development] CPD and industry experience kicks in,” she said.

“Tell me,” she asked Glenfield. “Is it not the case that the profession is losing around 6.4 per cent of financial advisers a quarter?”

Glenfield said he did not have those particular figures and acknowledged that he also did not have data on how many new advisers had joined the profession this year.

In asking her question, Senator Stoker provided what she described as case studies by way of example.

“You said that there's no prejudice to older members of the profession by the requirements FASEA's imposing. I'll give you the example of three advisers, each of which have more than 30 years of experience in the profession, who have been leading it, teaching others, mentoring others as they come through to be wise and fair and working in the interests of customers,” she said.

“Paul Franklin is 72 and he wants to continue to practice for another eight years. He's been told he needs to do a full eight-unit diploma to continue. James Forde is 64. He would be required to do the full eight-subject graduate diploma. And Wayne Leggett is 64, has a bachelor's degree and an eight-subject diploma of financial planning and would need to do five subjects. All have over 30 years’ experience in the profession. Can I suggest that the approach that is being adopted by FASEA is not sufficiently recognising the service, experience and prior learning of people who are at the upper end of the profession?”

Glenfield responded: “I would only respond that the legislation requires, as part of the lifting of the standards that it was aiming to achieve, that advisers reach a bachelor or higher level of education”.

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Nuremberg defence- haha - That is in the approved FASEA Ethic course.

This is the sad reality and unintended consequence of poorly considered legislation and regulation. I have 40 years industry experience, a Bachelors Degree in Accounting, a Bachelors Degree in Commercial Law, a Diploma of Financial Planning and a Diploma of Finance, but yet I have been informed I only have a "Relevant Degree" and must complete 5 units of study to retain my licence. In addition, we have had FOFA, LIF, Royal Commission and other "reforms" take affect. The reduction in adviser numbers from 29,000 to 25,500 is not the end of it.....it is just the beginning. There is significantly more knowledge and experience about to "walk out the door" and Australia will be worse off for it. To our Politicians and Royal Commissioners......you've gotta be careful you understand the ramifications of your recommendations and actions and you've gotta be careful what you wish for.

...and so they should be grilled along with the Parliament who are driving planners out of the industry with the endless reforms and threats to planners small businesses. It is when we lose another 10,000 planners that all these over education, disconnected from reality bureaucrats actually realise how they have destroyed small business and an industry. I am sick to death of being treated like a criminal - I have lost faith in this industry.

Glenfield's protestations are indeed as unconvincing as a Nuremberg defendant. FASEA has gone way beyond both the letter and spirit of the law. They have abused their power, to impose their own narrow ideology and/or generate income for board members'. They are exploiting media fuelled hate to persecute and plunder large numbers of innocent people. It is totally immoral and the government is complicit by allowing it to happen.

Spot on!

Well. The names cited as examples by Senator Stoker are known to many of us. Frankly, the industry might be better off without some of these old school million dollar round table lifers. I wouldn’t send my dead cat to get advice from the one I know. This guy is an expert in flogging stuff - and that’s about it..

Well this is part of the problem and why the laws were introduced how they were. If you can't have trust in your fellow advisers, the government was forced to step in and raise educational and ethical standards ( by law), the first code of ethics that is law in the world, so that everyone was on the same level, and then only illegal activity could be blamed for bad advice, not incompetence or not bad ethics.

Yes, charging a client $20,000 pa for "fee for service" by invoice, when you could easily charge $5,000 pa, is so "ethical".

I don't think the size of the fee is relevant here - as long as it's disclosed and the client accepts it and feels like they are getting value for it. The Code of Ethics says nothing about what an appropriate profit margin is.

actually, you should carefully read, "Ella's" post. in particular read carefully "subjective liability" she is 63, and a trained lawyer and that's all I have to say about that.

moreover, the code does say it, it says, your fees need to be fair, reasonable, and value for money. It also says, you should read the whole of the codes together in particular giving primacy to the five values, as an example, the values of honesty and fairness.

fair and reasonable and value for money according to whom ? what measures?

the code in it's current form is going to be hugely problematic, and that's all i have to say about that.

ok thanks - it may pay to be middle of the road with client types/fees. i.e. don't have too many or any 20K clients because they are more likely to be difficult to prove value in the eyes of a zealous/jealous regulator. Better with 5K peak clients?

the overarching values of trustworthiness, honesty, fairness, and diligence require you to act in good faith with your clients. good faith means you will deal with them fairly and honestly.

the standards require that you must :

a. Standard 2, act with integrity and in the best interest of each of your clients. acting with integrity requires you to be transparent and forthright, even if it is to your personal detriment

b. standard 4 (also standard 7 part a), requires that you receive from your client, free, prior informed consent. informed consent means that they have all information a reasonable person would expect to have before they make a decision

c. standard 5b requires that you must be satisfied that the client understands your advice, the benefits and costs and YOU must have REASONABLE grounds to be satisfied.

I would read the example 7 in FG002 then follow it through to page 20 and (4), what steps does Cedric do to ensure that the fees and charges the client is being charged is "fair and reasonable and represent value for money"

you may need to benchmark your services and give the client a fee schedule prior, and if you are at the top of the range in fees compared with a reasonable set of your peers (for example, if you are in regional Queensland, you can't compare your fees with advisers in Sydney CBD)

you should say something like (if this is correct), My fees are 30% to 40% higher than what you would expect to pay in the market (and let the client opt out then) but ;

i. I have substantially more qualifications than a grad dip, for example, a masters, or have multiple degrees and offer a more holistic comprehensive service than my peers
ii. I have substantial experience, of 20 years plus practicing
iii. your best friends who referred you to me are very happy with the services i have been providing them for 10 years, they say they sleep well at night, and tell me so, and have told you the same, i am the financial adviser to your whole street, and the next one, they all tell me how I have improved their financial well-being
iv. I don't have a value proposition, i am your winning proposition. with me by my side you will win more often, and make fewer mistakes, and you will win, like me.
v. I am the leading authority in xyz
vi. I wrote a book on xyz (related to personal finance obviously)
v. i self nominated for an award and won (maybe not so much)

that way, you have given the client enough information to give you their free, prior, informed consent and you have demonstrated that, and have reasonable grounds to be satisfied that you have indeed done that.

no court is going to find you guilty of wrongdoing, if your advice is always in the best interest of your clients, you always prefer their interest above your own and prioritize them; disclose all fees and charges and obtain free prior informed consent and can demonstrate that through your Quality process (refer to FASEA standards 7-9)

you won! it's always about winning. case closed. Next .

I don't know about the benchmarking to other peers. How would you possibly do that. And then wouldn't ASIC say, well we have a different set of peers we benchmark to, and that is 80% below your cost - think Robo advice or Industry super - so personally, I wouldn't avoid benchmarking. And how do you value peace of mind? Intangibles.

I didn't say the standards are practical. I said, the standards are hugely problematic to implement.

unfortunately, following the law - however disagreeable to my personal position or yours - is not a discretion

read the language of the standards, they are not mere guidance, they impose a very high obligation, YOU MUST.

a lot of advisers who understand have left, will leave, once they understand the enormity of their obligations. the only reassuring feature for me is that they keep bench marking with other professionals, lawyers and doctors who incidentally also charge a high fee for service.

V.Smart FP

Exactly correct. As mentioned by Stephen Glenfield of FASEA, at the recent Senate Estimates. $200 a year servicing fee for a retail super client is not as ethical as $5000 pa for an "advised" client. lol See this web link of Estimates. https://youtu.be/0hudfBs_Chw

Senator Stoker. My hero.

Too little, too late Senator...

I really appreciate Senator Amanda Stoker's efforts in this regard, however the bandwagon is rolling down the hill, over the top of advisers, and everyone has jumped on to be "seen to be doing the 'right thing'" - even though this has been done with a lot of ignorance and misinformation. Life insurance policies have been cancelled, trail has been cancelled, people are struggling now to get advice anywhere.
Geez Louise, firings will continue until morale improves!

What a "cop out" by Stephen Glenfield !
The legislation does not mean that someone with a current Bachelor's degree will provide better advice, act in the clients best interests or even know what it takes to engage with clients like many of those older advisers such as Wayne Leggett who holds a Diploma of Financial Planning/CFP designation.
The legislation is seriously flawed and unless the politicians start to take heed of the consequences of their over-reaching draconian requirements, the exodus of advisers is going to continue with very few new participants willing or capable of replacing those with experience now leaving.

FAESA could have also taken into account "RCC" - Recognition of Current Competency when looking at the system of "credits" to be available in addition to RPL - Recognition of Prior Learning. At least 1 credit for RCC could been allowed for to provide for those advisers with at least 5 (or 10) years experience. We do question why the both the Corps Law/Regulation and Ethics bridging subjects/Grad Dip subjects must be completed when these are covered in the FASEA Exam. Surely if you pass the exam under the strict exam conditions FASEA have imposed, then you are "competent". One can be excused for thinking this is a money making and/or culling exercise.

Don’t get too sucked by these performances where pollies look like they’re on your side. My experience is that they’re simply collecting names that they will use nearer the next election to a) get support and b) to pump up the mailing list for the next LNP fundraiser.

Best headline so far this year, sums up the contradiction those in authority are allowed to take, but not we mere peasants.

They're all just public servants playing the game of beings seen to be doing the right thing!
They get paid every week and none are held to account. Whenever something goes wrong, they were simply following orders. Hayne, who had no real idea about commericial reality, started this whole process about his shock and awe in a court room. Sure the banks and institutions ripped the profits and money and future wealth out of Australians, and now Australians are paying for it. Who cops the blame? The advisers. Those who get up every day, self employed, with everything at risk, their reputation, their business, their homes, their client book, their futures.
Who gets away with theft and robbery and walks away scott free? The banks and lenders and institutions. Look at the manner in which all have sold up and walk ed away from the mess they left behind. What's it cost them? A CEO here and there and a few million to get rid of them. It's cost remidiation, comes out of the shareholders profits. But the CEOs walk away. Criminals - nope - Con artists, liar, thieves? Yes.
But the government is blindly led by uneducated into culling huge swathes of educated, self employed advisers, all to the detriment of the Australian public who will now more IF they can afford it. These actions are on the head of (look at me) Morrison and (no idea) Frydenberg!

We haven't heard this Queensland Liberal Senator, Amanda Stoker make representations on behalf of any other workers who have lost their jobs through company restructuring, management incompetence, take-overs, technology replacements, etc.
The lost of (maybe) 4,000 financial advisors is not a lot given the job losses elsewhere and some of this 4,000 are probably forced retirement because they were found unable to abide by the law.
The Government had to step in when the financial planning industry could not manage itself and did damage to its 'clients' and to itself.
There's still plenty of advisors about and doing the right thing by undertaking new and continual professional development. Why should they allow those who can't be bothered to have a free run? If some can't do the study then it means they can't keep up-to-date with today's investment and economic situations.

I can't believe that no other journalist has reported on this story. It would be like shooting fish in a barrel.

Yes, and you are the fish, as far as the Union Super funds are concerned

@ Hardware,
As per usual you have little or no idea of our industry/profession.
Having completed all my study and qualifications before 2003, as a CFP I have had to regularly complete 40 hours per annum of CPD points which included 70.0% required by my licensee from online testing.
The number of accounting practices that refer clients to me would not happen if I was so bereft of capability or knowledge over the past 29 years running my own practice.
Your statement that old advisers get a free run is not only inane,. but, it's ill-informed.

There is a lot more to providing good financial advice to clients than having the latest financial planning/economics degree.
Those of us who have acquired economic qualifications some time ago, have one more intangible ingredient that new advisers and a few sanctimonious advisers don't have, and that, is a lot of life experience.

a lot of young advisers and recent entrants to the profession think that as they have a financial planning degree or something that meets fasea requirements, a full sleeve tattoo (on the left arm only) a beard which they regularly moisturize, post incessantly on linked-in & Instagram, they have what it takes to be a financial planner.

You are so right.. the reality is that Fasea value the fresh faced kid out of Uni over your life experience. From my experience, the fresh faced uni graduate often has a few important skills missing.... Empathy, Relationship Building and TRUST!!!

that's right. asic's own report 627 confirms it.

number 1 thing consumers look for : drum roll....... experience.

Stoker is "outraged" - really? FASEA is simply following Government legislation. You can emotionally refer to it as a "Nuremberg defence" but in Australia we expect and require public servants to enforce the law - not ingonre it if they dislike it. This was a law passed by both the House of Representatives and the Senate - that's right Amanda Stoker, the Senate, the House that you sit in. The law was drafted by and passed by your Liberal Government - do not blame Labor or the Greens - its on your team. So Amanda lets see the extract from Hansard where you raised hell and spoke against the legislation in the Senate. How many of your fellow Senators did you enlist in trying to stop or amend this madness? Oh by the way, what are you doing as a Government Senator to now change the law now you know what a detrimental effect it is having on the industry? Anything?

Spare us the childish theatre in Senate Estimates if all you intend to do is bully a public servant and snatch at some favourable headlines. Try and do something positive to fix this now. You helped create this mess!

Hey Mark, I don't think the legislation specifically stated that previous experience and ongoing CPD must be ignored. FASEA had complete authority to put in place an appropriate framework that would recognise experience. One or two course credits may have made all the difference for older advisers who are trying to decide whether they wish to stay in the industry.

You are correct Brett. FASEA had the flexibility to set up the framework as rhey wished. They could have chosen recognotion of current competency to recognise experience and CPD. They chose not to.

and, it was in their personal interest. not to.

I'm 63, have been advising since I was 28. I've got a Law Degree, voluntarily did the SIA Post Grad Dip in Applied Fin and Inv, the 8 unit DFP, then CFP, I do my 40 hrs CPD pa, charge a fee, have seldom had a client complaint, certainly nothing formal. Sit more exams? Take on subjective liability? You've got to be joking. I love my clients but I'm over it. Count me (and my years of experience as a senior woman professional) in the forced exit march.

it's a pity that you and many others like you are going to leave. what a travesty.

if it's just the exam, it's not going to be that hard, there are only 12 standards, i'm sure you will ace it.

i don't want to be the only older adviser left (though i am only 43), i don't have a full sleeve tattoo, or a beard, and I'm not getting either one either.

i am going to be lonely all by myself attending cpd, conferences etc. please don't leave me alone.

Hedware thinks you are full of it and the loss of you to the industry is justified.

Hi Ella, your SIA Grad Dip is approved provided you did certain subjects, but there is a very wide range of subjects approved so it's highly likely you will be ok. That means you only need the Ethics bridging course and you won't need to have done that until 2026. At age 63 you could probably forget about that and just do the Adviser Exam. Not the end of the world.

Sounds like you should have no issues in meeting FASEA requirements.
A good financial advisor is one that has worked through a recession.
Free loaders would have been a more apt description.

@ Hedware,
You just don't get it !
Most of the qualifications obtained before 2013 do not count under FASEA.
Hey, Ella, I'm with you on all fronts

hedware has a ph.d in mathematics. not sure what he is doing on this forum and not investing his billions.

Hedware does actually get it - he just identifies himself as a trouble maker and doesn't care whether the truth is uttered or not. Hedware is not an adviser and his salary is indirectly funded by ASIC. Isn't it my defender of Choice.

I prefer to refer to FASEA as the Schultz defence. I see nothing, I know nothing .... at least you get a laugh.

It's disappointing that you can be in an industry for 30 years and your only qualification is a Diploma. It's exactly these advisers that need to go. It's the choices these advisers made that have impacted all advisers today.

i agree with most of what you say adam, but i disagree with you on this occasion. what about responsibility of the standard setters, i.e. ASIC and the trade associations.

you can't blame individual advisers who meet the minimum education standards as they are set and meet them. It is evident, that you are passionate about financial advice, as I am, and together, we have undertaken significant study independently out of our own personal interest.

but, you cannot blame the individual adviser for not aspiring to a higher level of education just because you and I have. it's not their responsibility. you will see thousands upon thousands of lawyers with only a llb, accountants with only an accounting degree who have not gone on to complete post graduate studies or further study through their trade association, that's up to the individuals concerned to make a determination, as long as they meet the minimum standard, they are fine.

the questions in my mind is, was the bar deliberately set low? who came up with ps146 standard? what particular individuals or groups were involved in setting the bar so low. who kept it that low for so long?

these are the more pertinent questions we should be asking. it's these people's motives you need to question. and the answers may be revealing.

Interesting that the growing number of readers comments in the newspaper from consumers is that they are "finding it difficult to access financial advice". The Union Super fund's continual campaign via the consumer activists is slowly running out of puff. Not having enough advisers is NOT in the best interests of consumers.

this is exactly what happened in the UK. they had to rollback the reforms, as advisers were reluctant to provide advice.

what the hell for. are you kidding me, i am masters degree qualified, run a successful and highly profitable firm, have been advising for more than 20 years.

you think i am going to be cheap. no way.

all these reforms are only going to help the very few advisers who remain. they will be monopoly suppliers. i won't be able to help the ordinary australian for whom these reforms were meant to help.

that's not my problem to address it's for the policymakers to address, and the trade associations, but they are all asleep.

Yes. The only ones that seem to get it are at the coal-face. All the rest are on guaranteed salaries, & if they lose that job, that pick up a deal with a Union Fund.

How can the CEO not know the 5 values off the top of his head - that says it all right there!!

It is diabolical what FASEA are doing to advisers.
I am approaching 50 years old. I have two young children a wife and a mortgage. I have been an adviser for 20 years. I hold a Bachelor of Commerce and a Diploma of Financial Planning. All that I am told is worth 1 unit of the 8 unit requirement. It is complete BS when FASEA say advisers require a bachelor degree...because very few degrees qualify. A Bachelor of Commerce gives you one unit. GIVE ME A BREAK. On top of all that we all have to do a 3 month unit (2 assignments and an exam..220 hours) in ethics and an industry wide exam and have to complete 60 hours of continuous education per year.....all the while trying to earn an income, raise a family and pay the mortgage.
I cannot believe the wider media is not picking up the story. I thought the 20 suicides might have sparked a bit of interest or the thousands of advisers leaving the industry...whilst a handful (something like 20 only) have joined.
As the educational cut off dates approach the industry will be decimated and NO ONE will be able to get advice.

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