There is a long list of challenges facing the financial services industry in Australia and it isn’t my intention to provide an exhaustive list but here are a few to be going on with:
Reputation – our industry’s reputation continues to suffer under the weight of negative news flow stemming from poor advice practices
Raising standards – our industry needs to raise its standards or face further legislation to protect consumers
Adviser aspirations – to be considered “professionals”
Alternate providers – the democratisation of investing; robo-advisers
One continuum in the debate is ‘Education’, along with a tacit assumption that increasing adviser education will translate directly to better advice outcomes for clients and therefore an improved reputation for the industry. And surely if all advisers are degree-qualified we’re more likely to be considered professionals, aren’t we?
The answer is way more complex than simply jumping on the raising education standards bandwagon.
As US president Theodore Roosevelt said: “To educate a man in mind and not in morals is to educate a menace to society”.
There is a gaping hole in the financial adviser education debate. The advice industry is evolving and the education that is on offer to advisers has not evolved at the same speed and subsequently only supports half of what we do.
Sure, you need all of the technical expertise that can be gleaned through DFP or CFP programs, but is this really upskilling advisers in a way that will benefit their clients? I would strongly suggest not.
If the industry and its regulators really want to improve the way in which financial advisers serve their clients then we need to have a proper debate about expanding the very narrow and off-target adviser education that is prevalent at the moment.
Simply setting the technical bar higher will not result in better client experiences; if an adviser is DFP-qualified, putting him or her through a CFP is unlikely to have a measurable impact on client outcomes.
Advisers need to be better equipped to deliver on the soft skills – understanding clients at an emotional level is significantly more valuable than being able to technically value a share, for example.
I’m hearing plenty of noise around raising minimum standards of education for advisers, but surely there is a responsibility to include a structural review of what advisers are actually taught.
The current education programs tend to be supportive of the very issues and practices that have resulted in the call for higher levels of education in the first place – it’s paradoxical.
The more enlightened advisers recognise the need to provide a value proposition that is somewhat removed from the more traditional approach of assembling a suite of products followed by an annual review.
These advisers are focused more around engagement, education, guidance and support for their clients. This demands a completely different skillset.
“When a subject becomes obsolete we make it a required course” – Peter Drucker
Doing something is better than doing nothing, but being innovative requires creativity and deep thinking. Being reactionary requires neither.
I think the response from some large licensees to put their advisers through yet more technical-centric education qualifies as reactionary and lacks any kind of imagination or well thought-out strategy to genuinely improve client outcomes.
Be careful what you wish for, as C S Lewis said: “Education without values, as useful as it is, seems rather to make man a more clever devil”.
I think the industry, its associations and its regulators have a real opportunity and a responsibility to take a long, hard look at the skillsets required to deliver valuable and relevant financial advice to Australians.
They have an opportunity to engage with a new wave of advisers who are starting to do their job differently, the ones who are focusing on areas where they can make a genuine difference to their clients’ lives. At this time, there is a distinct lack of education that supports these advisers and that needs to change.
At Treysta, we fully support the call for higher standards of adviser education.
Our approach has been to firstly understand how to best upskill our advisory team.
To tackle this issue head-on, we are committed to taking a stance on the existing gap between required skills and industry training.
Once our advisers have been through their technical education, they are then supported through a psychology degree.
We believe this is a more rounded approach which provides our advisers with a more rounded set of skills and expertise to better respond to our clients’ needs.
Mark Nagle is head of wealth management at Treysta Wealth Management. He is a practising financial adviser and is passionate about improving the advice industry. He was previously associate director of operations at Locumsgroup Asset Management.
He holds a diploma of financial planning from Deakin University and studied economics, accounting and sociology at the West London Institute of Higher Education
