Professionalising advice occupation hampered by licencing regime

The current licencing regime has fundamental problems that is “handbraking” financial planning from being a genuine profession, according to an association.

Speaking to Money Management, Financial Planning Association of Australia (FPA) chief executive, Dante De Gori, said the industry had the hallmarks of becoming recognised as a genuine profession being best interest duty, conflicted remuneration had been removed, and needing a degree qualification.

However, the final missing piece was how financial planners were being admitted into the practice.

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“If you think about lawyers, accountants, engineers, they get admitted into the profession. In our space, you become a financial planner through an employer or licensee. The person you work for ‘anoints’ you as a planner and when you’re not working at that employer anymore you’re no longer a planner, that’s not a true profession,” De Gori said.

“An individual should be completely accountable and responsible for his or her certificate of practice or ability to practice. So, we’re arguing that individual registration should be done by an independent third-party authorisation and should be taken away from licensees.”

With the Better Advice Bill looking to get advisers individually registered by 2023, there were still questions surrounding whether this would add to the ever increasing cost of advice.

De Gori said the cost would decrease with a single set of regulators by removing the Tax Practitioners Board, and the Financial Adviser Standards and Ethics Authority (FASEA).

He noted that being individually registered would take away the responsibilities that many licensees took on and would decrease costs.

“Licensee still chase advisers for CPD [continuing professional development] records and whether they’re going to do the exam, where they are up to with education – they shouldn’t be doing that,” De Gori said.

“Doctors, lawyers, and accountants are individually responsible for their own education. Employers can assist by offering courses but they shouldn’t be chasing advisers like little kids.

“We want to change that and that will change the cost structure in financial planning businesses if that part of the process is no longer an obligation for licensees to do that. It’s also about how to streamline, reduce costs and remove inefficiencies. That’s why we want to restructure the licensee regime.”

De Gori said the FPA was looking to change the licencing regime within the next five years and that there was real momentum given the Australian Law Reform commission was due to be completed by 2023. The commission included licencing disclosure in its reform.

“Realistically over the next five years there’s real opportunity to make real significant reform changes. If we don’t do this, then everything we do or we think we are doing around cost of advice, and professionalising advice occupation is just tinkering the edges,” he said.

“This has to happen if everyone is genuinely serious about financial planning becoming a true profession and without this it can’t be.

“Unlike very other profession, there is still this licensing regime that connects the individual adviser to its master, its employer, and therefore planners can’t be truly independently minded. It doesn’t matter what the legislation says if they have to do if they have conflicts in terms of what their employer requirements are vs what their requirements are.

“It’s not just about the authorisation piece, advisers are authorised to give financial product advice, so this connection of advice being only about product is entrenched in the legislation so that has to be removed. So that separation of product and advice in licensing has to happen.”




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Yes and the cost to add an AR is not just the salary as in most other professions, but the Licensee added costs, another 30% or more of the base salary. No wonder the industry is not growing.

Interesting timeline Dante. In 5 years time...
A) less than 5,000 advisers will be left
B) the life insurance industry will have collapsed
C) class action lawyers will have bankrupted thousands of advisers using the unworkable FASEA code
D) the FPA will still be sitting on tens of millions of cash, pushing some good ideas like self licensing, but ignoring the big issues that are destroying careers, businesses and access to advice
E) all of the abive

You are correct. The advice profession is on its knees and faces imminent collapse.

By the end of this year, so 5 years is way too long. There won’t be anything to save.

I can’t believe licensees are chasing advisers on cpd. We don’t make things easier on ourselves do we.

You should already be at 5 or 6 cpd hours this financial year.

At 2 weeks and 5 points you are targeting 130 CPD points for FY22. My you are a keen one, no clients?

I have hundreds, but I know a lot so it takes me 10 to 20 minutes to do 5 or 6 hours. must be hard for you though.

I regularly do 90 hours pa (this way no one can say I did minimum hours as 90 is more than double the required) but it only takes me 3 to 4 hours in total to do it as I don't need to read the articles can get the questions right without reading them.

it's called being a professional.

You sound more like a smart arse then a professional
Maybe just over confident ?

I am not stupid. and I just double-checked, it's already 9.5 hours for the month

I think the idea of Professional Development is to learn something, rather than just do a "challenge" on the questions. Answering the questions might give you the points, but you're not really getting any "Professional Development". :P

CPD stands for CONTINUOUS Professional Development which means you should be doing it continuously - not 10 hours once a quarter.

that's up to the professional to decide how they do it.

What does your licensee's CPD Policy require? Are you in breach of that Policy and therefore you are in breach?

not sure, I think I will self-report for doing too much cpd? to whom do I report? my licensee? or to ASIC directly.

let me email my compliance team

I concur with Irene's comment above.

you are just jealous. just do your stupid cpd.

Looks like Irene is right.

Most advisers need to be chased so hopefully individual licenses will weed out more advisers that are not the future

what a sad statement but true.

The underlying direction being made by Dante De Gorilla is correct however it’s imperative that the multiple associations claiming to be the head entity of a profession get their own houses in order ahead of a self registration era. To this end the FPA and the AFA should be one single entity and other outlier associations such as the AIOFP should be disbanded or merge in favour of one source of truth. Doing this will reduce the need for dealer licensing but it will take time to establish the transfer of liability away from the AFSL holders of today. At the moment the discussion is all one way on self regulating but at some point who carries the financial liability has to be brought to the front. In the current litigious environment and over regulated advice rules it would be a welcome discussion for dealer heads.

Who carries the financial liability in an individual registration model? The individual does via their PI insurance. Just as doctors do. With increased professionalism via FASEA, and less involvement from product companies masquerading as "advice" providers, there is no reason PI can't operate as effectively in financial advice as it does in other professions.

I wonder who the FPA thinks the 'independent third-party' to authorise should be? Pushing its own insignificant barrow again!

Advisers are treated like children with respect to CPD, 9 hours ethics mandated and there is limited ways to gain these points. Surely a true professional determines where they would most benefit from additional education and/or focus on their core business/client areas not some regulated piece of crap system like we have now.

Typical FPA as per a previous comment, their own self interest, no BID FPA?

The needs to be licensed or 'anointed' through a company sounds a lot like completing a 'Masters level qualification' but not being able to advertise the achievement unless you pay annual fees to a company that gives you nothing back.

We can agree that both should go.

It is all very well for Dante to be promoting Individual Adviser registration, though I'm not sure if he understands that this will be more requirements, more risk, more cost, unless there is a dramatic reduction in the whole Regulatory world and a simpler model that allows Advisers, clients and all vested interest parties to stop needing to play the guessing game as to what is the Best practice model.
Advisers are already snowed under and need help. One certainty in this Country, is if there are any changes, they are NEVER SIMPLE and ALWAYS add complexity and cost.

IFA News did a survey in June this year asking: "Which Industry association provides the best value for money?"
2118 votes
**FPA - 4.6%**
AFA - 32.8%
AIOFP - 32.2%
PIFA - 0.5%
other - 29.6%
How can an association with just 4.6% of the (sample) community thinking the FPA provides value for money, be taken seriously? Me thinks not.

What's the point of individual licensing if a Licensee will still dictate compliance. What good is there if 400 licensees all have differing processes and interpretation of compliance. Is Dante advocating for the demise of licensee compliance? I hope so, because compliance should be streamlined, and we should all be operating on a similar interpretation of the rules, and possibly using the same advice templates.

that's what the AFA and FPA should be doing, have an ASIC endorsed, Fact Find, Risk Profile, SoA, ROA, FDS, enhanced FDS, opt-in, letter of engagement, service agreement (initial and renewal), client fee debit form, trustee fee debit form, file note template. all of these documents can be standardized, and that way we leave no uncertainty for professional financial planners who can then go and do the most important work: serving their clients and working in their client's best interest to achieve their desired outcomes.

AAARRGGGHHH, stop with the logic, it hurts my brain!

Yes, the FPA is advocating for the complete removal of licensees. Things like compliance monitoring and templates will ultimately be up to the individual's own professionalism. However there will be various service providers who can assist with this to reduce regulatory risk, promote best practices, and save reinventing the wheel. There already is an established ecosystem of compliance consultants, paraplanners, and tech companies who provide such services to self licensed advisers.

Once the licencee role is gone, some dealer groups will morph into pure support providers and continue to offer very similar services as they do now. However the adviser will have ultimate control and responsibility.

I say hand all the compliance interpretation, and templates to the Single Discipline Body, so that its a universal compliance message/process for the industry. If every adviser used the services of all these individual compliance consultants they will all have their own interpretations of rules and templates and it will be a mess.

Mmmmmm... "...that employer anymore you’re no longer a planner, that’s not a true profession", just like when you leave the FPA, you're not a CFP any longer Dante. Seems you're just trying to be relevant because the AFA is outsmarting you...

the fpa isn't doing anything different, if you are not a financial member of CA ANZ or CPA for example, you also cannot use their designation. seems fair to me.

Replace the licensee with the FPA! .....so when you attend that SMSFA PD day you'll get 8 hours according to the SMSFA but 1 hour with the FPA.....Clearly, since Dante lost the self regulation opportunity....the FPA wants to muscle in and replace one self interested body (the licensee) with another self interested body being the FPA....As the FPA have said to me we do not represent you or planners or Australians... it represents Industry participants equally which includes licensees and product manufacturers and until the FPA is focused on reducing red tape we won't have any positive outcomes.

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