Restoring confidence in the financial advice profession has become a catch cry for institutions recently, but the reality of the proposal is still a way off, Amelia Constantinidis writes.
The drive to improve and lift standards of professionalism is essential to ensure the ongoing delivery of quality advice to more Australians. As recent events have shown, the push towards professionalism must be consistent and constant.
Education and ethically principled conduct are the hallmarks of a respected profession and applying these guidelines to financial planning is the pathway to raising the level of education and professionalism in the industry of financial advisers.
AMP and others across the industry have announced plans to raise the bar in lifting professional standards for advisers.
By requiring financial planners to hold these qualifications we are ensuring the highest standards of professionalism and education. And customers deserve nothing less.
We firmly believe that financial advisers should achieve high standards of education, but along with academic training, practical experience goes a long way towards shaping the kind of financial adviser that will deliver advice that changes people’s lives for the better.
Why focus on education?
The focus on education is part of a commitment across the industry to lift the bar on adviser professionalism.
Improving the industry’s level of professionalism is a way to help insure against the risk that a few bad apples can destroy Australians’ trust in the financial planning sector. There has quite rightly been a focus on those situations where clients have been victims of poor financial advice.
What we don’t often hear about are the countless positive stories, where good quality financial advice has made a very real difference in improving people’s lives. We know that those who seek advice are more likely to achieve their goals around the things that are important to them – like owning a home, protecting their families and preparing for retirement.
A widespread improvement in professional standards will bring better outcomes for clients and hopefully increase the confidence of the wider community in financial advisers. It’s a positive result for everyone.
With only around 20 per cent of Australians seeking financial advice, there is a significant number of the population who do not seek any kind of financial advice. All Australians should have access to quality advice and as a profession, our achievements can be measured in part by succeeding in providing more advice to more Australians.
One of the ways for us to do this, is to grow the financial planning profession. Increasing confidence in the financial planning industry will inevitably drive the sector’s growth. That growth will lead to increased demand for financial advisers.
With the high rates of underinsurance leaving many without adequate cover, the importance for Australians to seek advice has never been higher. As a sector we need to move towards a best practice that will help develop that trust and regain that lost confidence.
Also, the critically low number of self-employed business owners who pay their own superannuation will lead to retirement financing problems as the next two generations prepare for the end of their working lives.
There are many reasons why more Australians need to place their trust in an expert who can guide their finances towards goals that will improve their lives. The process of getting more Australians to seek advice begins with increasing the professionalism and the education of the industry.
Additional education benefits
A focus on higher learning will also bring attention to the ethics of financial advice and study of the best practice principles of being a good adviser. This will create a ripple effect of benefit that will be felt throughout the industry, as advisers share ideas and information with each other in a professional networking capacity.
Recent events have made it clear that the industry needs to do more to make sure that advisers have the right ethical foundations to make the decisions that put their clients’ interests first.
Improving education standards throughout the industry is the key to raising standards. Alliances with industry associations, ethics centres and education institutions including universities will further enhance the drive to lift these standards.
Focus on customer
What we must never lose sight of in all of this is the role of the customer at the very centre of everything we do. The world is changing rapidly – technology is improving, and influencing the way that individuals want to interact with us.
We need to adapt to this changing world if we are to continue to thrive. This requires thinking about some things differently so that we can meet the often diverse needs of our customers and further education is an excellent way to keep in touch with the latest academic research and business trends.
Regaining trust
We in the industry know the positive impact good advice can have for Australians. Having control over their money gives individuals much more than peace and security – it gives them the independence to fulfil their dreams and aspirations.
Financial security allows people to live better lives. It’s unfortunate that the actions of a small percentage of our community have tarnished what is at its heart a very noble profession.
But we need to make things right, and rebuild trust in what we do. Putting our clients’ needs first is at the heart of what we, as financial advisers, should focus on. This is how we improve our clients’ lives and their financial situations. And this is the mark of a professional industry.
Amelia Constantinidis is director of AMP Horizons.
