Boutique advice firm Axiom Wealth has used its submission to the parliamentary joint committee inquiry to argue advisers should be focusing more on developing practical skills to “drive quality outcomes” than on tertiary education.
“We do not support any move to retrospectively mandate tertiary qualifications for financial advisers,” Axiom’s submission said. “Theoretical studies are often a poor substitute for practical experience.”
“The issue with any qualification is that it involves study at only one particular point in time. The legislative and regulatory framework in our industry is changing (all too) frequently and we believe that the key to delivering quality advice is continuing professional development,” it continued.
The submission also pointed out that there is a greater case to be made for the “appropriate education and training of senior management and responsible officers” rather than just advisers, given recent scandals emanating from decisions made by senior management.
“The key to ensuring that quality advice is consistently delivered (in any sized organisation) is a set of robust systems and processes,” the submission from Axiom said.
“Senior management and responsible officers need to be held personally accountable for the success or otherwise of the overarching checks and balances in a planning business,” it said.
Synchron authorised representative Peter Corrie also penned a submission, arguing that mandated tertiary qualifications for advisers will “jeopardise” the industry’s future growth.
“We already have a huge shortage of advisers, currently around 18,000, which is declining,” Mr Corrie said. “It will decline even further if you have to have degree at entry level.”
“The fact that someone has a degree, hopefully in a related field, does not guarantee trust or best ethical professional practices,” he said.
“Rather it is trust, respect and confidence by clients that is earned by the adviser over a protracted period of time that matters.”
Do you need a university degree to provide quality advice? Have your say below
Angelique – Someone once said a long time ago that the world is full of educated derelicts. Still true today, or the politicans and the rest of them wouldn’t have the financial services industry in such a mess.
Angelique, don’t discredit experience. I get that full time students are finding it hard to find work in financial planning but don’t push out those who can communicate effectively to clients and solve this problem the government faces by not having enough money to fund its ageing population. I have a Masters Degree – I don’t devalue education but experience in building that trust is more important. I’ve seen a good deal of academics fail to get the message across – funnily enough even when I was studying.
Peter Corrie, so you would be happy to use an accountant or doctor or lawyer that does not have a degree?
Yep, that’s it Joe…spot on, and that’s the way financial planning should be. How we untangle ourselves from the current mess is the hard part. One would think the government would be in favour of the idea. The FPA and AFA would drool over the increased memberships too.
At the current state of play I expect SOAs to be 120 pages in 5 years time and para-planning companies to list on the stockmarket.
The major difference overlooked in comparing us with other professions is the extra onerous compliance and documentation requirements we have. If someone came up with a practical solution that gave us equal standing as other professions, like *Removal of ASIC having jurisdiction and only our professional bodies as regulators * Removal of SOA requirements, similar to ALL other professions * Removal of FOS/COSL and again as per every other profession, civil court where disgruntled are less inclined to make vexatious claims * Disbarment of rogue FP’s decided at the professional body level and enforceable by law, similar to Legal/medical…
If these were the proposed trade offs and commercial time/cost considerations on the table, I am certain that the vast majority of existing or ‘older’ non-degree FP’s and likely would sign up for an appropriate degree
Yes I believe you do need a degree
A degree in Financial Planning
There needs to be a clear path of study in the discipline like any “normal” profession
Diploma – Degree – Masters with continuing industry experience
The last thing we want is Arts degree students who leverage to planning do a certificate and get FPA acknowlegement..as CFP’s what a joke and there all still around
Bring on the Masters requirement and Industry experience all the plastic swans will die
Peter
Thanks Joy. Put it another way, I know more about estate planning and CFP material than someone just out of their degree. Why do I have to go back and study CFP 1 to be recognised by the FPA as an estate planning specialist? I was made to do Kaplan SMSF course because SPAA wasn’t recognised on ASICs register – its all a waste of my time and money. I always wonder who is profiting when these things come out. Also when you are around my age you have children who need you, full time demanding workload and you have done your studies. People should not have to go back and get a degree to stay in their profession that they are successfully advising in and ethically etc… Is it in the clients best interest? I doubt it.
I agree with Michelle: how far do we make older planners go with this study requirement. Thats important because no matter how well educated the adviser, if compliance is not maintained. The provisions of s 945A of the Corporations Act Compliance with two key rules! 1. know your client and 2. know your product! Education and experience are so very crucial but if compliance is not maintained, in truth the parliamentary inquiry into adviser standards remains a dead issue.
Dipti, new entrants yes but would you ask a 50yo GP to become an intern again and go back to UNI as it was now required that all doctors must have a cardiology specialty in order to keep being a GP? This would be preposterous.
To become a profession a degree is required. More accountants go to jail than planners, many degree qualified, it doesn’t guarantee fidelity and probity but it is a necessary step to professionalisation in my view.
Yes i agree that one needs a university degree. Financial planners are specialists. Would you go to a doctor who has experience but no formal qualification? A university degree in related field gives a working knowlegdge and buids basic foundation. Ongoing professional development further enhances those basics to take you towards specilisation.
Would you allow your finances to be handled by someone who does not have basic education in his related field of work?
yes I do believe a degree is required. Financial planners are specialists just like doctors. Would you go to a doctor based on his experience with no formal qualification? A basic degree ensures you have a working knowledge of the industry and you know the basics. Ongoing professional development means building further on your basics to reach a specialist level. I agree it does not guarantee ethical practices or trust. But this is true for any specialised occupation.
Would you be comfortable handing over your finances to someone who does not even have a basic level of education?
Agree that no manner of education will stop those that feel they have the right to take what is not theirs.
However we must also appreciate the fact that social media and digital disturbers are now offer your clients many lower cost alternatives, so what is going to make you stand out and keep one step in front of your clients own skill levels if its not to be education up-skilling of yourself. If 60% plus of clients are already doing their own product research before the come to you what else will be able to offer them if its not education up-skilling of yourself.
Learning is an ongoing journey for life, not just a course here and there but many ongoing courses over the course of your life, as your clients in some cases are now becoming smarter than some advisors who seek not to constantly up skill.
The first thing you need is honesty. A degree does not guarantee a best quality outcome or ethical advice. Michelle! You have an excellent understanding in thinking outside the square…
Education is important, experience is fundamental.
I have a Masters of FP, CFP, SPAA Specialist, and accounting qualifications. What miffed me was that my CFP wasn’t good enough to get recognised as an estate planning specialist if I did that course – I’d have to go back and do CFP1. Yet I’d just mentored someone through the CFP. In industry over 20 years. My point is: how far do we make older planners go with this study requirement. We have to do an enormous amount of CPD points every year – surely that counts?
If my doctor had a good bedside manner, lots of empathy, had my best interests at heart and years of experience I would be horrified if (s)he didn’t have a degree.
Rocco,
As to your valid question, “in what?”, I think in anything would be a good start. However I presume that employers would obviously be more interested in related degrees. I would also have thought that any university introducing a dedicated FP degree (or at least major/honours), would be well supported by the industry and sought out by students….particularly if our future planners are compelled to have a degree.
Your point about the need for smarts, and it coming with experience, is of course true…but the same can be said of doctors and lawyers and accountants. All professionals need more than the slip of paper from uni to be good at their job: bed-side manner, advocacy skills, etc. What is lacking in the advice world, compared to those others, is appropriate education.
If the advice industry wants to be regarded as a true profession, it needs to demand the same rigorous standards of its members as other professions do.
I left out relevant education in folder records in my prior comment. Sorry!
Definitely no! But Honesty is essential & when questioned,a folder of references & a history of ones past (highlighting crimes, fines & jail time if any) should be compulsorily provided if requested by a client.
Sure a few universities in Australia are substandard, but most offer a reasonable education (not training) so it doesn’t matter what degree the person takes. It is about the character of the person – and going to the effort of getting a degree says a lot about character.
This is a profession and a qualifications should be mandatory in the field of advice be it law, accounting, medicine or financial planning. There are many fine advisers who do not have university qualification and they may have entered into the industry during a different era. We should not forget that they have been the back bone of the industry helping to build it up to what it is today. I have been in the industry for over 33 years, a CFP and am over halfway through my Masters of Financial Planning degree. I must admit there is a lot more to learn and one becomes more cognitive. I highly recommend others to elevate their education as it will improve business and client confidence.
Let me explain. I’m not against raising the bar, but a Tertiary qualification in what? I have over 20 years experience and yes I have Tertiary qualification in Engineering not economics or accounting. I completed the old DFP course and then undertook the first Master of Commerce course at Western Sydney University. So I’m not against education. But I think you also need to have the “smarts” in dealing with people when it comes to money. That comes with experience and commitment to the profession. Just because you have an degree doesn’t guarantee the best advice. For example, one could complete all the necessary educational degrees and then get a job in a bank as an adviser. Need I say more…
“Practical work experience and emotional intelligence trump theoretical education”…. just like medicine and law really. Who needs all those pesky years of learning all the fundamental knowledge before being unleashed on the public with your professional skills?
Seriously, if the advice industry wants to be treated as a profession alongside others – throw in accounting as another one – then commensurate levels of education are required.
Agree that there should be grandfathering provisions for those who arent degree educated…but give it 5 to 10 years and watch the clients flock to the future of the industry.
so is ok for accountants lawyer and doctors not to have degrees, get real if you want to become a professional raise the bar of entry as its a joke. Yes your need ongoing experience, but to began in the professional you need to have a degree. It just shows me how far behind Financial planning really is, here is an opportunity to to be on par with other professional.
Are they kidding? A tertiary degree in what? Economics, accounting maybe an Arts degree majoring in business? Or perhaps a degree in psychology so we can deal with human behavior. Know your client, know your product and act in the clients best interests. Simple,
It is the type of person that is important. You need to generalise to get the right policy, and the simple fact is that the type of person who works hard and makes personal sacrifices (rather than partying and building their emotional intelligence) to get a degree is a safer bet for retirees than someone who doesn’t need to plan 3 or 4 years in advance to get a degree.
Non-degree folks have been impossible to manage in large organisations because they take expedient actions to maximise their revenue: see the numerous ASIC undertakings on their website.
Retrospectivity for a degree requirement would destroy many established, profitable and well run businesses and is actually just not fair.
New entrants is a different kettle of fish. Supply side issues aside of new labour it is a must in my view.