There’s a brief story relayed in Diogenes Laërtius’ work, Lives and Opinions of Eminent Philosophers, that concerns Plato and Diogenes of Sinope, also known as Diogenes the Cynic. There are some differing versions, however at some point in the 4th century BC, Plato jokingly defined man as a “featherless biped”. Diogenes, having little respect for the abstract nature of Plato’s philosophy, plucked a chicken, took it to Plato’s Academy, and remarked: “Behold! I’ve brought you a man!”
The incident highlights an interesting clash of language and meaning, where categorisation is imprecise in an attempt to be clever and instead introduces confusion.
The financial advice profession found itself with its own plucked chicken on Thursday morning when Financial Services Minister Stephen Jones announced a new class of advisers would be added to the fray – the “qualified adviser”.
Many within the industry found this an odd label, given that the fight over advice qualifications has been a long and messy one, finally reaching some measure of conclusion following the royal commission, the Financial Adviser Standards and Ethics Authority (FASEA) exam, and a concerted effort at professionalisation (some would argue the experience pathway has stood in the way of these efforts).
In his speech on Thursday, Mr Jones explained: “Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters.
“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.”
He added that, in terms of fees, “qualified advisers will be prohibited from charging a fee and from receiving a commission”, which he noted, would help “restrict their advice to simple advice”.
This would be a good time for Australian consumers to remember: if you are receiving a service and not paying for it, then you might be the product.
Plucking the chicken
The details of what qualifications/advice these qualified advisers will hold/provide are not exactly clear, but the minister did relay the broad strokes.
A qualified adviser will focus on simple advice, and they will be required to meet a government-mandated education standard.
“The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance to be less onerous than the requirements for professional advisers,” he added.
An important note in that last quote from Mr Jones is the reference to “professional advisers”. Indeed, that’s the designation that those currently operating as relevant providers will be known as to the public.
If nothing else, at least the government has taken a concrete stance that the current cohort of degree-qualified advisers do constitute a profession.
Where things become murkier are in relation to the Corporations Act, specifically s293C. When Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 passed through Parliament, it added a restriction on use of the terms “financial adviser” and “financial planner”.
In the context of the new “qualified adviser” class, with limited scope, institutional employees would not be relevant providers. While the use of “qualified adviser” may not be specific enough to actually breach the law, it does represent a dilution of a restricted term.
Featherless biped, indeed.
Perhaps Minister Jones will follow in Plato’s footsteps as consultation rolls on and add something akin to the “with broad, flat nails” addendum the philosopher tacked onto his definition of man.
a total con from day one. Artificially inflate the cost structures needed to provide advice- make every single process a hurdle to jump.
then when you are happy – give a free pass to your team to be exempt from the regulations you have just brought into play.
this was always why we needed these reforms – a commercial imperative
the War on conflicted renumeration appears to be over – replaced by Education and Ethics – at least that is what some people have been saving – lets be a profession etc?
Well, uneducated providers of Personal Advice to retail all paid for by the product provider seems to be the new thing.
So what was the issues with conflicts and education all about?
Can’t wait for the regulator to define ‘less complex matters’.
You assuming ASIC would ever investigate an Industry Fund?
Ok, enough of the whinging already! Here is the positive spin on this. I contend that the industry super funds are about to become the most successful marketing campaign for the benefits of getting independent financial advice in the history of this nation…. and best of all, it will be 100% free advertising. So STFU and stop your whinging.
In the mad rush to thrust their ‘qualified advisers’ down their members throats for the benefit of ‘member retention’, they will single handily, and inadvertently advertise to all their members the importance of getting ‘real advice’. Right now, most Australian’s simple ‘don’t know, what they don’t know’ which is always the hard part when starting out on the education journey with new clients. Case in point… how many advisers out there have encountered individuals who are, or sadly were eligible for a TTR pension that had heard of the terminology, but knew nothing about it before speaking to you. These people have been slogging away at work in their 60s trying to build enough retirement wealth blissfully ignorant of the fact that they are leaving tax money on the table for the government, rather than it going to their retirement savings!? Furthermore their ‘balanced’ fund is probably 75%-85% growth, with 20-30% of that in unlisted assets ..I’d be astounded if there is a single adviser out there who hasn’t come across numerous pre/post retirees like this that are leaving money on the table unnecessarily and setting themselves up for major reduction in retirement wealth when the next market correction rolls around… and if there are advisers out there that haven’t encountered these scenario’s then if you’re not specialising in another area of advice, I put it too you that you are $hit, and should quit now and join the ‘qualified advisers’ at the super funds for our benefit, because you clearly don’t know how to scope advice.
Let’s face it, the Super funds with their massive marketing and spending budgets (their members money I might add) will change their members understanding so that they move from ‘not knowing what they don’t know’ to now ‘knowing what they don’t know’. A subtle shift in understanding, but a monumental upward shift in demand for good independent advice.
Now my fellow advisers let’s do some simple maths on that. Minister Stevens himself said there are 4.5 – 5 mil Australians entering retirement right now and needing advice, which is one of the few things I can agree with him on, and hence why the massive push for super funds to be able to provide advice. Of the 16k ‘licensed advisers’, I estimate at best 10k would be active (i.e. subtract institutional advisers that are fully registered, specialist advisers (i.e. Insurance, Aged Care, etc..), part-timers (e.g. accountants) PY advisers & advisers that have already closed off their books to new business because they are fully loaded with clients), and I’d say 10k would be optimistic figure. But even so, if we divide 4.5mil into 10k advisers = 450 clients per adviser.
Now let’s assume that 90% of members that suddenly receive a call from or make a call to their call centre based ‘qualified adviser’ giving them just enough information to now realise what they don’t know, just blindly accept the ‘free’ recommendations of the ‘qualified adviser’ who ‘educated’ them about this wonderful thing called a TTR, or ‘carry forward’; ‘bring forward’; ‘annuity’ etc, , etc,. Well, if only 1 in 10 members bothers to get a ‘second opinion’ from someone independent, it will still equate to 45 new clients per adviser, which would be a challenging onboarding exercise for any financial adviser.
The reality is also that more than 10% will make further enquiry. As naïve as a lot of people are, I would like to think that someone who has worked hard all their life and is wanting to have the best financial outcome in retirement, or perhaps just received a $2mil inheritance from dear old grandma Bettie who’s last dying wish was for her grandchildren to invest and spend the money she gifted them ‘wisely’ will make further enquiry once they are awakened to the options and possibilities that their ‘qualified adviser’ at the super fund so kindly took the time to educate them on. Besides, those members that blindly follow the advice of a call centre based adviser from their super fund is not the kind of client you want anyway, they have future AFCA complaint in waiting written all over them.
So my fellow advisers who have being beaten down by years of being dragged through the $hit, these QAR changes are a gift. The Super funds will do so much advertising, and so much promotion that we won’t have to do a thing, other than pickup the mountain of clients that will make that one call for a 2nd opinion.
No doubt there is a downside, and that downside is that we advisers will have so much work out of this change that we cannot possible help everyone. For those we can’t help, that’s very likely poor outcomes for the members and a future RC 2.0 in the making… unfortunately that can’t be avoided. But, just like we cannot change what will happen in the stock market,… and can only ensure our clients are best positioned for any outcome. So too with the QAR… all we can do is help as many Australians as we can to achieve better financial outcomes.
So a final shout out to all the doomsayers, stop bloody whinging and get on with the job of helping Australians with the money. Do that well, and these QAR reforms when they go through will ensure clients take to you like ducks to water.
Lol – “these QAR changes are a gift” – thank you Santa Jones
Did someone say KFC…?
Jones’ preferred outcome: drive down fees by forcing advisers to compete against “free” advice.
Too bad if it forces advisers out and/or to super funds. Our associations’ hand-wringing is noted.
The rest of the wording and excuses are pure guff for the gullible.
There’s no way that Mr Jones wants us (advisers) to take involuntary redundancy… he’s having too much fun watching us wither on the vine. Death by a thousand cuts.
In news just to hand, the new term for a legal secretary is going to be ‘qualified legal practitioner’ while paralegals will now become ‘qualified solicitors’ and kids who have finished their PLT will become ‘qualified Kings Counsel’. Let’s see if the legal profession goes for THAT.
But more seriously, it seems Minister Jones is using the word ‘qualified’ akin to how auditors use it for an audit: qualified or unqualified. In keeping with that, if the industry super fund salesperson is a ‘qualified adviser’, does that make the rest of us UNqualified advisers?
No it makes us a Relevant Provider. Surely the public will understand the difference – with tongue firmly planted in cheek.
lol! Yes its going to be fun. I asked the accoutnants in the shared office which option they think is our service? Qualified Adviser v Relevant Provider. They all thought full Finanacial Planners would be the Qualified Advisers. Relevant Provider had them stumped!
exactly – its always in the language
Revealingly, Josh (from accounts who lost his Kooyong seat) did not dispute the fact that “reducing advisers numbers” was not a bad idea.
Now, it seems that Mr Jones wants us advisers to number “Zero”.
I would call Jones a certified idiot, but alas, he has no certificate.
I would have thought the term “unqualified adviser” would have given much more clarity to consumers.
So ‘qualified advisers’ get paid by the super funds they work for (I image over time super funds will increase their admin fees to cover the cost of this service)? In a round about way you can call it an ongoing commssion that the super fund (not the ‘qualified adviser’) collects and not be held accoutable for.
if i recommend the exact same product as a ‘Financial Adviser’ i need to charge a fee for my work – the super fund will not subsidise my cost and the client will effectively be paying two sets of fees (the hidden one within the product) and the transparent one that i have to disclose and obtain consent for every single year.
Not sure how anyone thinks the above is a level playing field – clients wont know the difference between a ‘qualified adviser’ vs ‘financial adviser’ until it is too late.
God help the avearge consumer that will only know that a ‘qualified adviser’ does not charge, and a ‘financial adviser’ needs to charge.
90% of the population to be served by ‘pluckers’ while HNW are supposed to understand ‘qualified’!
I think liberals just won the adviser vote…
I’m going to Pauline. I don’t agree with anything she says but I can’t vote for any of the others.
Should be interesting with product comparison and conflict of interest.
Qualified adviser = someone with the most basic level of qualifications their employer can get away with.
Relevant provider = someone with a university degree and that has been through a period of professional development.
If someone told me they were a qualified doctor, I would expect them to have a degree and have taken time to learn all about their job. Why wouldn’t it be the same for financial advisers? Can only be due to backroom deals.
I think they are onto something big here a whole new language.
Lest just call the front desk at the police station a qualified Policeman and the the traffic go slow pole holder a qualified civil engineer.
Its a big worry when a simple name or title is this hard for these people, what are they doing with the big decisions, who knows and god help us.
Can someone explain why we have a solicitor running our ministry and a solicitor who wrote the report about our industry are we so hopeless that we can not sort it out ourself. When was the last time the Attorney General was a Financial Planner or Policeman or Plumber. I think we just start our own party Peter J lets get the lunatic Public Servants trembling in their boots
Stuff it – I’m going into real estate. Agents get everything they want from government.
That’s because Albo, and 99% of Canberra Pollies have Investment Properties up to their eyeballs.
A democratically elected labour minister doesn’t have a clue how to fix the issues in advice. He is just being pulled around by big guys in town. He has no intention of really fixing the industry so real professionals can serve the public effectively, ethically and economically. Instead, he created a “Qualified adviser” for super funds, banks and insurers to exploit the system. Sarah Foreman, Group Executive of Aware super and also ex-Westpac senior executive, even calls for the P.S.146 standard to come back again. [b]Is this a time tunnel to go back twenty years??? This is an unexpected disaster in 2023 (additional to the ASIC levy, CSLR).[/b]
We need a system to require [b]relevant qualifications and experience[/b] for people to become ministers NOW!!!
Bring in the clowns…. whoops, hang on – they’re already in Canberra.
Move on Mr Jones – YOU are obviously NOT QUALIFIED to deal with this portfolio!!
At this point I don’t care what name they use, just pick something and legislate.
Can’t deal with another year of everyone losing their heads over such inconsequential changes.
Ok Albo
2 levels of adviser will confuse the masses. The term “adviser” should be left solely to the qualified advisers. The others need a name that doesn’t include the word “adviser”. Maybe Product Representative or something similar. However, if the Government insists on calling these lower tier helpers “advisers” then perhaps they are called Restricted Advisers – a term that would probably make the public ask “restricted, what does that mean?”. However, they will know it is actually basic & restricted by the name alone.
Yes Robert, well said. BTW, why don’t the thumbs up icons work when clicked. I mentioned this weeks ago – anybody read these things at ifa??
No they are thumbless ?
Maybe we can borrow from other trades and professions to describe types of advisers. From the nurses, we can borrow enrolled and registered. The trades can give us journey man (now journey person) and Master (now Master/Mistress). The profession of arms can give us commissioned, warranted and other.
If they are in house staff why not follow the telcos, fast food and Bunnings and call the them consultants, co workers (sorry I almost wrote co wokes) or team members. If you are into plain English, (vain hope with govt and ASIC), you could call them employees. If plain English is not your thing try “human recource” or “human asset”.
Another alternative, wait a year until AI takes over and in the meantime use voice altering technology to make them all sound like machines.
Even better, we could forget the whole lot and require clients write a cheque for the advice they receive with no indirect payments of any sort permitted.
Let’s be honest a better term for the new class of advisers would be “Conflicted Salesmen”.
It’s hard to imagine anything in the form of advice that is in the best interests of consumers will be delivered. In the absence of fees or commissions, their employers (ie. Superfunds and Insurers) will be spruiking sales for their own products. No doubt with sales targets.
As Keith has noted in his article, “if you are receiving a service and not paying for it, then you might be the product”.
Minister Jones clearly thinks it is too hard to fix this compliance mess we ae buried in, as he promised. Instead we have him tangent-ing off with a band-aid fix rather than solving the root cause of the problem.
In so many areas, we just don’t have a significant number of votes, ourselves. A few showed what could be achieved if we rallied those we serve, our clients.
If only our associations or someone else lead the way to develop a unified front and a campaign where we can go to our clients and make things happen for the better.
For the benefit of our Country, our clients our business and ourselves something needs to be done to counteract the power of the Big Banks, Big Super and the accountancy lobby.
We cannot do it ourselves. Without a significant voter pool lobbying is a weak tool.
Lets see if our Big Association and others can lead the way to let our clients know what is happening.
We have more influence on votes than you might think.
Correct – this is at the core of what needs to be done. So much time and effort has been wasted in the past, only to end up in a never-ending quagmire of red tape, and ever-increasing costs. It is clear no-one in Canberra is listening, or even cares. If we don’t stand up now, there will be little left in the middle.
Maybe the Hon Stephen Jones is trying to say that super funds, banks and insurance companies will be allowed to engage technical salespersons to promote their OWN suite of products. THEY SHOULD NOT BE ALLOWED TO PROMOTE PRODUCTS OTHER THAN THEIR OWN AND CERTAINLY NOT PROVIDE TAX AND COMPLEX FINANCIAL ADVICE. The question is how do you police this and ensure they are not crossing the line.
The proposal should be debated a lot more. We do not want to go back to the days before the Royal Commission.
The correct name should be simply be “product adviser” as the adviser is paid from the product provider not by the client.
Orwellian as it gets.
Guess everyone in private practice will now set up a managed accounts and charge a fat margin on it and employ some (un)qualified advisers giving free “simple” advice to support the relevant providers. These guys will be paid a salary and bonuses! What’s good for the goose will be good for the gander….. Vertical integration looks to be back…..
Great idea as soon as these pollies try and outsmart us we turn around in 5 minutes and leave them with their pants down, they are so dumb. they make the simple look complicated and the easy hard. Anyway i am off to write my PDF for my Managed Account now, you beauty – 2 steps forward and 3 back.
Imagine the confusing discussions. Client – Are you a qualified adviser – Adviser – No, but yes.
In my opinion, the label “qualified adviser” will imply that anyone that isn’t a qualified adviser will be an unqualified adviser. It is so frustrating to think that after 20 years of experience, every bit of study possible, that a client may confuse my title as someone “unqualified” versus someone who has done a few basis subjects.
After more than a decade’s efforts to improve the perceived skills and ethics within the profession, the government has undone this with one stroke.
If they wanted to provide the multitude with “free” advice, this is their responsibility. Opening the floodgates to employees who can hide behind their employer’s registrations and public liability insurance is just ludicrous.
Recognised Accountants (not just any accountants) had the basic skills, ASIC’s endorsement, formal qualifications, ethical training, and their own insurance – full risk. Not good enough. But any employee of a bank or a public offer superfund is now eligible. Laughable!
The term “qualified” is grossly misleading. The term should be “limited”
This is a ploy to fool the public into believing these people who will be employees of predominantly industry super funds are superior to self-employed licensed advisors.
The advice will be subsidized by all members paying for services they never use.
Meanwhile advisors outside this network will face increased levies, onerous regulation, bans on remuneration via commission ( yet this is a preferred client option ), burdensome CPD requirements, clawback of annual fees if a meeting isn’t held – the list goes on.
Jones is a donkey working 100% on behalf of the ISF network.
Back to the old GESB days of running “Superannuation Seminars” & rolling their competitors funds in without any SoAs. lol
Qualified Product Agents would be a better term.
Ha, the qualified advisors are these…the people that just spent $20k on a masters are ?????
It’s an intentionally misleading label and should be completely separated so the consumer knows they are not dealing with a Professional Financial Adviser and instead a sales rep for an individual company. DO NOT CALL THEM ADVISERS AND CERTAINLY NOT QUALIFIED
The public for too long have not understood the difference between personal advice, general advice or factual information. In their eyes it is all the same, all that is used to make a judgement on how they will apply it to their own personal situation. New class of advisor will be another complexity in which the public cannot understand the difference.