Advisers and professional bodies are “doing a good job” at promoting financial advice but need to repair the industry’s reputation if they want to encourage more people to join the profession.
Speaking to Money Management, Kirsten Macdonald, program director for commerce at Griffith Business School, highlighted how people were unaware of the roles or benefits of the financial advice profession.
This was a problem when there were many advisers opting to leave the industry in light of the changing regulatory requirements but few were joining to replace them.
“It is hard for students or career changers to know about financial advice and they might be getting information from people like their parents who don’t understand it.
“Advisers and professional bodies are doing a good job at getting the message out but the trouble is they are up against all the regulatory reform and the colossal advice failures which were highlighted by the Royal Commission. Every industry will have bad apples but the bad ones in financial advice were on show.
“The industry should demonstrate how it has changed with things such as the Code of Ethics and start to repair its reputation.”
She said she had seen many people move to financial advice from professions such as teaching or nursing who were good at nurturing relationships and empathy and from engineering as they were analytical and good with numbers.
She commented the recent pandemic led many people to re-seek financial advice again in order to deal with the market volatility which was an encouraging sign. However, there were insufficient advisers to deal with them which led to them being turned away at a critical moment.
“The pandemic was a trigger for a lot of people including those who might have had advice in the past but wanted to return. Unfortunately, the advisers said they were busy with their existing clients so had to turn them down,” she said.
“It was especially difficult due to the lockdown as advisers said it was hard to onboard a new client over Zoom and build a relationship and those who took on new clients said it was an emotional time.”
Comments
Maybe we start by explaining the difference between an industry and a profession. When the banks were wrongly allowed to enter financial service, advice was institutionalised in a way AMP and National Mutual couldn't even get close to achieving in the 80's and 90's. I hope young people are smart enough to tell the difference. If an 18 year old wants to become a doctor, maybe they can already differentiate between a specialist and cosmetic surgeon. We cannot rely on our so called "professional bodies", this one's up to us advisers committed to our future.
Turn it up. The more any prospective student knows about the industry, the less likely they will be to join. And it has nothing to do with past misdeeds, but everything to do with the Liberal government's actions in imposing great big new taxes and reams of useless red-tape.
The industry is simply no longer attractive.
There is nothing more nauseating than outsiders telling us we need to do more to 'repair our reputation'. Research has consistently shown consumers of financial advice rate their financial adviser and their experience very highly. If there is a misplaced perception in the community, we need to look at the cause. The CFA Institute surveys consumer attitudes around the world. Australia stands out with community trust roughly half the levels around the world. Why is that? It isn't because financial advisers are crap at their job. Clients are saying the opposite. Here is a novel idea - maybe it is time for the organisation which is actually charged with the responsibility of instilling trust in the financial system to be looked at?
Perhaps they beefed up for FASEA and now that the pipeline is ending and Griffith Uni course enrollments are down we need to fix their problem. She's just completed a great research paper showing exactly what you've said about advisers and so why doesn't Academia help fix the problem and that problem is ASIC, and over regulation and Red Tape. Far better if Griffith Uni went to ASIC and Treasury and said make it easier because these Advisers add value... here's the Academic independent tax payer funded research. but No it will just sit on the shelf.
Dear Kirsten, Rather than "advisers" having to advertise we're "professionals" (one element) we need, is the reduction in regulatory red tape that would in turn allow me to see more clients. We need people like Kirsten to write a letter to ASIC saying you just did a survey and your Academic peer reviewed Research showed advisers added immense value but Financial Planners are drowning in Government red tape. We need you to sell us. You've done the study. Thanks by the way you're a legend.
Kirsten Macdonald...it's only one element and I can say that working with Universities for a long length of time myself . The biggest is the media calling any old shonk, Accountant, even George Pell a financial adviser/planner. Thankfully MM has not done this recently. I note the FPA and AFA were very slack in their failure to call out Melissa Caddick when media consistently referred her as an advisers. The other issue is that the Government knows the FPA are on others (AMP/Hesta) payroll and simply don't listen. That's someone Advisers need to change with the FPA as we need conflict free advocacy and the FPA are more about looking after their relationships with large insto's.
Student numbers are directly correlated to Stock Market performance and so we've faced a double whammy and so student enrollments are always going to be cyclical. So if we protect the term Advisers more, reduce red tape, and getting proper representation and even people like these Academics going to Tresury and ASIC on our behalf you'd get more students enrolling in Advice.
Please redo article and heading with some reality:
MASS BS GOVT OVER REGULATION KILLS ADVICE INDUSTRY.
ASIC for 20 years, followed by Frydenberg for 8 years along with his puppets ODwyer & Hume have driven a comprehensive anti Adviser mass over regulation campaign.
After the Big Banks stole $1,600,000,000 over 10 years from customers super & investment accounts, of which ASIC knew was happening and did nothing about it.
The RC embarrassed the LNP Pollies against it, ASIC for doing zero to regulate the Big Banks and of course embarrassed the big banks.
The Big Banks decide retail advice is all too hard now and exit asap, LNP Pollies lie and say the RC was needed after all don’t blame us cause we set up the RC, ASIC say they will kill /litigate expensively anything that moves now whilst Advisers who did nothing wrong will pay for our legal fees and costs.
What that really all means is the Pollies, Big Banks & ASIC then all point the finger at Real Advisers and persecute them to death and hope the public falls for it.
What a sad, disgusting bunch are the LNP, ASIC and Big Banks.
Is Ms Mcdonald delusional? Why would anyone want to join this industry that suffers from "persecutory" oversight of poorly constructed and reactive legislation and civil and criminal penalties and consequences that no other industry has to endure
Wait a while. Mortgage brokers are next.
oh forgot to mention the suicide and mental toll which is till rising !
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