I am always suspicious of any enterprise, idea or person when they cannot simply explain their purpose for being at the table in a transaction that affects my wellbeing.
Hypothetical question: Do the proposed FASEA rules around professional education fall short of other laws?
As far back from 1960, the then-governor general William Morrison commented that “the development of tendencies to monopoly and restrictive practices in commerce and industry has engaged the attention of the government which will give consideration to legislation to protect and strengthen free enterprise”.
This marked the beginning of a revived interest in competition law in Australia, eventually resulting in the 1974 Trade Practices Act and what we now know this piece of legislation as: the Australian Consumer Law.
Less attention has been paid to market participation by governments, although a number of subsequent inquiries and amendments did ultimately lay out the circumstances in which a government agency could be considered as operating ‘in business’.
Fast forward to 2017 and the Australian Parliament passes a Bill into law creating a body with almost unlimited powers to oversee an entire profession: FASEA.
Since its birth, we’ve all seen the uncertainty rise and read apparent lies about former qualifications older than a decade being disregarded. The rule, if it is true, would in effect wipe away a person’s entire education, formal knowledge base and toil, for which they paid dearly.
Certain sections of the legislation should send shivers down the spine of every senior adviser who is captured by term “existing relevant provider” under the amendments to the Corporations Act 2001.
Yes, FASEA may fail to actually undertake proper consultation, but it matters naught. Subsection 8 appears to be their free-pass to immunity for breaching their duty to all stakeholders that will be adversely affected by the changes that eventuate in law.
Of course all this is so far academic (pardon my pun), because we are all awaiting the sermon from the mount by FASEA chief executive Deen Sanders and crew, which we are told is “coming”.
Well so is Easter and so is the deadline date where no further stakeholder engagement can happen, 29 June 2018.
What might we see in financial services come 2024?
One possible view is that these proposals are an extension of what many of the banks started bringing in a few years ago – degree minimum entry for financial planners. If that is the case then we can question the motivation behind the new laws.
Similar to the Life Insurance Framework (LIF) changes that commenced only six weeks ago, the proposed higher education changes will assist the large end of town gain more digital footprint where customers can be sold products without advice as part of the overall institutional shopping experience.
Direct distribution and sales channels are the only way of the future for banks. We have seen them extracting themselves from the mess they created for the past number of years now. Much of the bank’s FUM sits under individual planners who won’t meet the requirements under the proposed FASEA rules.
We will also see the continued rise of fintech and robo-advice from the proposed education standards as the cost to deliver personal advice is potentially pushed higher by the simple cost of doing business.
With the above in mind, a curious mind turns its attention to what conflicts of interest are embedded in the decision makers – not only those who preside over the rules but those who make them!
And yes, we have already done some digging and question the ethics and motives of some who are party to these new laws.
A few arguments to consider
Depending on your legal interpretation of a number of different pieces of legislation, the government body FASEA may be not only ‘reducing competition’ for consumers of financial service advice and products, but it [may] also be by its conduct falling short of Section 18 of the Australian Consumer Law in that it has failed so far or omitted to provide any formal guidance to industry stakeholders on matters such as education courses, final subject requirements and exemptions for prior learning or formal qualifications held.
In fact for such as body to have [seemingly] unlimited and unchecked powers, the way it is conducting itself thus falls short of the Murray report’s recommendation that says industry participants should act with fairness, transparency and respect.
Finally, the introduction of the new education rules will have an impact on competition – you cannot argue that it won’t.
Experienced older advisers who are within three to five years from what would have been their retirement goal age will exit. We have seen recently that one major bank is reducing its workforce by 1,000 while at the same time foreshadowing an increase to its IT job intake over the next few years.
This follows the theme of direct sales channel and robo-advice where higher profits will make happy shareholders, not happy customers.
These measures will also potentially place downward pressure on client book values if enough advisers start exiting in a short space of time – supply and demand.
In my view, this is once again knee jerk legislation to a problem that may be resolved by organic transition within the industry. Banks are exiting and the IFA market is rising.
I’d like to see the modelling that Treasury did before allowing these rules to be imposed on real life people – I bet there was very little done (if any).
I am too old, too tired of tilting at windmills by myself – sure it’s fun dropping $50,000 to take down a bank subsidiary and prove a point, but it’s not exactly ‘wealth creation’ 101 at its finest!
But this one isn’t my fight really, not in a huge way anyway. but I do feel for others.
I spent an absolute fortune educating myself mostly before ever making the decision to invest another person’s hard earned money or tell them how to plan the final 15 working years of their life.
I’ve done all the subjects that the sketchy media releases suggest I may have to do to escape going back to school for two years of my adult life.
So why am I even giving a hoot?
Well I believe in fairness, I believe in equality and I believe awareness of all the facts empowers people to make better choices in life.
I am not one to simply let FASEA tell me that red is now blue and that what I learned, retained and have put into practice must now be relearned again just so the education and training fraternity can experience an uplift in enrolment, fees and board members can get a consultancy fee and pat on the back from [ABA CEO] Anna Bligh and co. when their pays and share prices go up!
Stay tuned as I’m sure the “best is yet to come”, as Ol’ Blue Eyes Sinatra would say.
Adam Kennedy is managing director of Ethical Financial Advice, an authorised representative of Shartru Wealth and a Global Goodwill Ambassador.
[quote=Anonymous]Address it to the world Brian, just like it does on FAR. Your ‘professional’ not ‘personal’ details are all that’s required. We dont need your shoe size… [/quote]
How about the big brave boys go first – you know, the ones too scared to tell their names to the world, the ones without the conviction to their comments to stand behind them, the ones who hide behind the label ‘Anonymous’? Hmmmm . . . yep, as suspected, CRICKETS.
So Adam is what you are saying what is good for the goose is not good for the gander?
Love how as an industry we are lectured by politicians and bureaucrats on how to be fair, transparent and ethical whilst they refuse to lead by example. They base sweeping laws on little evidence or deeply flawed representations that effectively change the playing field for those involved. These people are too stupid to realise they are being manipulated……or are they?
If you didn’t laugh you would cry.
To anyone that feels that because they have a relevant degree now and they are exempt I would say they need to be very wary. I have already started developing a Bachelor of Advisory Science degree. . By 2024, your Masters & Bachelors Degree in Financial Planning just may be outdated and you’ll need to update it to cover the concepts in the Advisory Science degree.
can you please change title of the said degree to, Bachelor of Advisory and Rocket Science
Will do. The first Unit is a Subject called Financial Acronyms Regulations Knowledge 101. or FARK 101 for short. It’s an in depth and comprehensive study of the meanings of FSG, FOS, SOA,PDS, FDS, ROA, CFP, ASIC, FOFA, FASEA, etc etc. I told FASEA they should get FARK’d on their register. FASEA told me to get FARK too, so I took this as their approval and so we’ll need to learn all this stuff at AQF Level 8. Therefore back to school, because as you’ll know practical on the job learning won’t cover this very unique financial planning language sufficiently and FOFA wasn’t even around when I studied my degree in 2007.
If you’re not studying FARK 101 now, your Degree is a complete waste and I”m pretty confident by 2024 you’ll be needing to get FARK’d.
so funny, i wish we had an adviser who was also a comedian, we have so much good material to make one laugh, or cry or both
The thing is the people who are doing wrong by their clients regardless of education will now no doubt use those clients money to pay for their education.
YES! Irrelevant education for risk advisers will NOT stop clients being defrauded or ripped off. Idiot politicians! Life companies keeping their ear to the ground and alerting ASIC to the bad apples is one of the only ways. More education is only feathering the nest of self-interested academics linked to the education feeding trough.
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It is a travesty that I and other riskies will leave, forcing us to retire 3-5 years earlier than we OR our clients wanted. But when have those responsible for this EVER had client best interest at heart. I’m looking at you politicians, life companies (no adviser support on 2 year claw-back or LIF risk licence/qualifications) and self-interested consumer groups with a point to push. Clients, thanks to these creatures, come last and pay the cost.
Very well said
Right on the ball, Adam. But we can’t all sit back- each and every adviser MUST lobby their local member, annoy the daylights out of O’Dwyer and flood FASEA with submissions. Hit all forms of social media and bring the short comings of this legislation to the public eye, and don’t forget all you clients etc.
very true.. however when Shorten gets in at the next electorate then god help our industry.. they won’t do anything to support us.. that is why O’Dwyer should be ashamed of herself in bringing in these changes.. just add to the Bureaucrats in the industry!
What a load of crap Adam. The education deadline is almost 6 years away, not 6 months, not 6 weeks, but 6 years. Plenty of time for the pathway for existing advisers to be determined and for any educational upgrade to be completed. How many different government bodies would u like to see in existence regulating the educational & ethical requirements for advisers? 3 or 4? Seriously? Then you’d be complaining about waste of money & excessive government. FASEA have cocked up the initial engagement, which they’ve acknowledged, but the education piece for existing advisers is the last piece in the puzzle, which is why it wasnt addressed first. FASEA only get to implement what the government has put in the legislation. Unlike ASIC they dont get to interpret and make their own law. If you dont like it, speak to your local member, write to your state’s senators. But good luck with getting any politician to make any changes at this stage. there is no political capital for LNP pollies & there is open hatred & contempt from Labor & Green pollies. Any existing adviser with only the equivalent of the DipFP or AdvDipFP should be made to do something, no matter how long they’ve been in the business. Existing advisers with a non-business related degree should also have to do something. If we are talking about making changes for the better, let’s not be all half-arsed about it.
A simple rebuttal to a complex problem. I can’t think of a single case that was put down to poor education or experience. It was greed (personal) and vertical integration (corporate) greed that was responsible in almost every case I have ever read. No exams will fix this.
I am not against improvement, degree minimums etc but the current proposals are grossly unfair and punish the innocent many for the few reprobates.
If I was an adviser and due for retirement in 10 years but had 30 years under my belt and failed the current limits being mooted I would have to do a uni degree so could work for four (4) more years. Why the hell would I?
This will, as Adam correctly observes, depress business values which in turn will lead to poorer retirement outcomes for advisers who have served their local community and employed people this last 30 years. What “great community good” does this achieve?
What I can’t understand is that university graduates only have a ticket to the game, they actually know nothing of value, they need to learn on the job through guidance and mentoring using their education as a foundation. I strongly support this model going forward.
How will this be possible with vast swathes of the of the mentors forced into an early exit?
I have AQF9 (Masters) but it’s more than 10 years old. If this is an issue I am out, I will not go back, I have worked too hard for too long to get my undergrad and post grad and I’m still in my forties. I just hope I can sell before the rush. The hardest part will be explaining my decision to my clients and my staff.
A great number of individuals will be punished for the crimes of vertical integration if this process is not completely rewritten. This will be a case study on how over regulation immolates an industry.
I fear it’s too late and simplistic assessments of a complex problem do the debate no justice.
I think that you will find that this “10 year rule” has been misinterpreted by many and used as the whipping boy for much of the outrage shown by advisers & commentators to date. I believe that you will have no issues (assuming it’s a Masters in FP). I’m in a similar boat to you, dont necessarily want to do more study but honestly dont believe i will have to.
Hopefully the aging advisers you’ve mentioned have taken their own advice over the years and arent sitting on a single asset (their FP practice) as their sole retirement plan. If that’s the case, then I have little sympathy.
All the arguments about a dastardly few, the evils of VI, etc etc may all be valid and I agree with you mostly, but there comes a point when tilting at windmills serves no productive purpose. The government has cast our industry aside, the opposition & Greens detest us, there’s a Royal Commission upon us, the media just love a story that they can use to sell papers/generate clicks, our frenemys at Union Super love to tell lies about us, the public have a collective reserve about us. Clients think their adviser is great because they’ve dealt with him/her personally but the rest are crooks. There is nothing positive in this debate for us. Standing in front of the tsunami holding a little sign that says “We’re not all crooks” will do little to save u from drowning.
The only avenue is drastic change. You cannot achieve this by offering “grandfathering” to every existing adviser as that’s what the outside world sees as the problem. Nothing changes if nothing changes. If that sees a few casualties, that’s an unfortunate by-product, but seemingly one that wont be avoided in the current environment. If all you have is a DipFP or AdvDipFP get ready to get busy doing some study.
Let’s wait and see about the 10 year rule ?
But for how long as consultation closes 29 June 2018 and is yet to open?
When Deen Sanders only public comments at SMSFA conference is that older degrees get STALED. Is hardly a positive comment on the 10 year rule approach.
Of course PS 146 = DFP 1-4 is a joke and has to change.
But to totally disregard highly relevant & costly past government university course is beyond absurd. And a Finance / Economics / Accounting, etc related degree with the Full DFP must count.
Along with other specialist courses, SMSF, Estate Planning, etc.
The 10 yr limit was discussed in relation to how universities assess prior education for exemptions into future courses that individuals may undertake. They are 2 different things with what FASEA will decide on existing advisers and how unis assess for RPL.
“1) For those Advisers, holding a qualification that is titled as a Financial Planning/Advice qualification (or has a recognised major in financial planning/advice), but:
o is NOT an approved qualification (i.e. it is not on the FASEA/FPEC approved register, which has been in existence since 2011), OR
o it was NOT completed within the last 10 years, THEN…”
Doesn’t read like anything to do with RPLs to me. It most certainly reads like your degree has gone stale.
well said
Interesting that you think ASIC gets to interpret and make their own law but FASEA doesn’t? I really don’t see how they are different. Both have extensive powers to enforce the law, and both have significant wiggle room to impose their own bias in doing so. ASIC’s “too busy” approach in relation to acting against unlicensed advice by accountants and union funds is a classic example of that wiggle.
It certainly appears that FASEA has cocked things up so far, but until they issue a clear retraction of the “10 year rule”, and clarification around bridging courses, it is hard to tell whether they are actually conflicted and biased, or just poor communicators.
The pathways for existing advisers will not be determined until the second half of this year at the earliest. That leaves 5 years to complete the required education, not 6. And do you want to leave any subjects until the last available semester before the deadline? What if you need to resit? There will also be a compulsory exam during that time which is likely to require considerable study time to prepare, as no-one uses all aspects of financial planning in their day to day jobs. Forget the “6 years” line. In practical terms it is 4-5 years.
Yeah…. 4-5 years for something you can easily complete in 1 – 2 years max. If that isn’t enough time you should be a practicing adviser now as you’re not up to scratch.
If planners were being assessed purely on practical real world stuff then 1-2 years would indeed be sufficient. That’s what a DFP or ADFS is all about. But higher education is far more abstract and esoteric. Practical knowledge is only a small part of the requirements.
Just as new university graduates take time to adapt to the real world, experienced practitioners will take time to adapt to the university approach.
you sound like someone who works for an industry fund… you are not self employed managing a business with endless red tape and compliance
Nope, running a business… Just actually know what I’m doing. Its not hard if our ‘experience’ means as much as we like to lead everyone to believe.
Thanks for the comments Adrian Rafferty, the bloke who makes a living from the people he despises
Ummm no … it is not me!
Anonymous’ above states: “What a load of crap Adam” and then dribbles on with his myopic views. Firstly, tell us your name, then we can begin to seriously assess further dribbles that emanate froth from you. Until then, your comments mean little. What a sad little creature you must be. Adam’s commentary made compelling sense and would to any true thinking person. To flippantly call it “crap” shows you as crass, dismissive and, as your further comments demonstrate, clueless on many issues.
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What part of ‘more education will not improve fraud and theft’ do you not understand. These are advisers with a personality problem and possible mental health isues – not advisers who need to learn more about derivatives, currency exchange and contracts for difference! This whole sorry chapter in out history as an industry was only started by a small handful of advisers being fraudulent and cheating people – character flaws that will not simply be rectified by more technical education.
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Comments like yours are perpetuating the myth that our problems will be solved by the pitiful ineffectual academics who are trying to get everybody to drop everything to go back to school for absolutely no reason other than to enrich the connected academics and their cronies. MORE EDUCATION WILL NOT STOP THE FRAUDULENT ADVISERS BUT TEACH THEM NEW STREAMLINED AND EFFICIENT WAYS TO COMMIT THEIR CRIMES. GOT IT? GET IT? GOOD!
Thanks for the free character assessment Brian. I did post my name but as so often happens with this site, it defaulted to ‘anonymous’.
Which bit was inaccurate? Which bit where i said there was no love for our industry from politicians of any brand, from Union Super, from the media or from the general public? Have a rant all you like, it wont change what’s happening one bit. No one cares what we think, no one will lessen or relax the rules that will soon govern our educational requirements. Squeal all u like, ‘shout’ at me by placing everything in capitals, if that makes u feel better.
The simple fact is that we have an image problem, and part of that problem is fuelled by the public perception that you can do a weekend course and then be free to go forth and advise people on their financial futures. That’s what’s brought us to this point along with dodgy advertising by some in the industry (Union Super) and journalists who also misrepresent and twist the facts to link all issues back to all advisers. I agree that there’s a small bunch that have caused the headlines, and in many cases the fault of the headlines doesnt even lie with advisers. I agree with that. But fixing the perception problems we have as an industry/profession wont be assisted by maintaining the status quo. Something has to change, change is never easy, but to improve and advance that change must occur. Education standards need to rise and they will under the rules that the Government (not FASEA) has brought in. It’s not the entire answer but its part of it. Your choice is to keep whinging or to get on board. You sound like a whinger, so i’m guessing that’s what you will continue to do. Did u GET THAT?
Thanks for your considered reply. we’ll have to take your word that you have a character to assassinate as we don’t know who you are. Therefore i’m not stressing that I’ve assassinated anyone’s character. Oh, we’ll also have to take it on faith that you did indeed ‘try’ to add your name to your initial and subsequent patronising comments.There’s a difference between trying and doing if you hadn’t noticed. Should tell that to your academic mates who’ve never left school since they left uni.
I said assessment not assassination, but anyway what’s good comprehension got to do with selling life insurance.
Good luck looking to hold out for the lowest common denominator in educational standards.
Remember, it’s not about what you, Adam Kennedy or any adviser thinks is right, it’s what the broader community expects, and the changes government implements as a result.
(hopefully meeting the new dictum of 60 words max)
PS: It’s always hard to trust a bloke with two first names, didnt anyone ever tell u that?
Hahaha! Too funny. . . yes, you go ahead and win the day with your petty personal attacks. We’ll all be here when you are ready to join the grown ups and leave your teen-texting style behind. Oh, remember to grow a pair and add your real name to your next comment, unless you have the need for a ‘safe space’ to which you can withdraw.
And looks like you only have the DipFP which I guess was probably just the 4 units, correct me if i’m wrong. So someone with the minimum level of education railing against the need for higher educational requirements. Nothing like self-interest is there?
Haha! Too funny – said with conviction by the big man called ‘Anonymous’! You have to be joking . . . no clue . . .
so tell us your quals Brian. Got more than 4 units of DFP?
. . . and to whom, exactly, am I addressing my response about my personal details?
Address it to the world Brian, just like it does on FAR. Your ‘professional’ not ‘personal’ details are all that’s required. We dont need your shoe size…
C’mon Brian, tell us what you’ve got.
Post Graduate Study will most definitely help uplift the quality of the comments here.
the arguments would be reasonably reasoned and argued, analysed and synthesized and short
Please everybody, can we please try to limit to one paragraph i.e. no more than 60 words
When and how have FASEA acknowledged they have cocked up the initial engagement ?
Deen’s speech at SMSFA conference only confirmed that degrees older than 10 years get STALED – his words.
As for Consultation ? FASEA have no physical address, no phone number, no email and only a PO Box that is not open for consultation submission, but is confirmed to close 29th June 2018.
FASEA are purposely avoiding consultation.
Can something get ‘STALED’ ?? Is that even a word?? He did say that that degrees and qualifications can get STALE after an extended period of time, which shouldn’t be something controversial. Can you recall everything that you learnt 10 years ago? Is it even relevant 10 years later? Some things are, but plenty of things arent. That’s the context of how i took the ‘Stale’ comment.
Sanders said that they under-estimated the level of adviser anxiety about something that doesnt come in for almost 6 years. They had deadlines imposed by govt, set into the legislation, and they were addressing them in order. He acknowledged that improving the level of education will take time via part-time study but believed there was ample time for existing advisers to address and meet the new requirements.
Well said Adam