Speaking at the FSC Leaders Summit in Melbourne yesterday, Ms O’Dwyer said it is “envisaged” that the standards setting body will have the power to exempt some advisers on a case-by-case basis.
Under the proposed reforms, existing advisers will have from 1 January 2019 to 1 January 2021 to pass the exam.
“However, the exemption from the exam will be reserved for advisers who are exceptionally qualified, and who have many years of experience in addition,” she said.
Further, she said all advisers will be required to undertake continuing professional development from 1 January 2019 and will need to comply with a code of ethics.
Existing advisers who are topping up their education to reach “degree equivalent” status will have until 2024 to do so.
Ms O’Dwyer said she is confident the new framework will improve the “quality and integrity” of financial advice.
“We want a robust framework for improving standards, whilst also minimising the compliance burden for the industry and for individual advisers. Stakeholder feedback from the consultations broadly agrees that these objectives will be satisfied,” she said.
“These reforms will boost consumer confidence and trust. They will professionalise the industry. And, ultimately, they will benefit advisers, their clients and the industry as a whole.”
There are, however, technical details that still need to be settled, Ms O’Dwyer said.
“We will keep working with industry and consumers to make sure we get these reforms right,” she said.
Higher qualifications does not mean better advice for clients. Malcolm Gladwell in his Outliers book states that if you would like to have skills at a world class level you need to commit 10,000 hours. I totally agree with his sentiments. There is no point having higher education without a documented program post qualification. Does a 20 year old with a Masters in Financial Planning and 1 year experience in a financial planning business have the skills to be a Planner? I think not. Does a 24 year old with a Masters in Financial Planning and a completed 4 year accredited apprenticeship program have the skills? More likely. My gut says the proposed reforms still have a long way to go and an exam does not solve the problem. Qualification coupled with experience does.
What Kelly O’Dwyer needs to understand is that most advisers do not have an issue with education improvements that are reasonable. I would be surprised if any were not doing extensive CPD already or looking to improve education.
The bigger issue is for independent advisers specialising in risk insurance.
The proposed LIF reforms reducing upfront’s to 60% and a 2 year clawback means that we simply cannot write business profitably and clients will not pay fees for just risk insurance advice.
In other words it doesn’t matter how well educated independent risk advisers are, we will be out of business.
The FSC know this as they are trying to drive out competition to their appalling direct offerings or bank aligned only risk advisers.
Sally Loane has been publicly requested to state the benefits of the LIF to consumers and refuses to do so because she knows this will be a worse outcome for customers but will increase profits for members of the FSC. As such she is desperately trying to push the reforms through before they are properly scrutinised. And be clear the FSC does not have bypartisan agreement for the current LIF.
Kelly O’Dwyer needs to wake up to the real FSC agenda and understand the appalling consequences this will have on under-insurance and for customers being able to access affordable and independent risk insurance advice.
Complacency or sympathies with the big end of town due to previous employment will be no excuse for bad results for the end consumers. It will be a personal liability.
Education simple provides a person with a body of knowledge. There are numerous ways to achieve the same and experience is one of them.
Whether the adviser applies that knowledge in best interests of their client (legal requirement) is more of an ethical characteristic than that of education one. We all know what the right thing to do is it is just that some choose not to do it.
As a 30 year veteran in the industry, Chair and RM of a 20 person AFSL, practitioner to 150 active clients, and a non degree qualified CFP who easily exceeds the CPD requirements each year, I’m likely to be the type of adviser who might qualify for the exam exemption. Younger advisers would still call me a dinosaur who hasn’t done anything more than the advanced Diploma, whilst advisers of my vintage (50 and older) would agree that I’ve undertaken all of the qualifications that were necessary at the time, and its passing the test of face to face client time that really counts. The irony is that I suspect that I would easily pass any skills and technical exam, but as a business owner, and provider for my family, why would I risk doing the exam if I could get an exemption?
As such, I believe what the adviser community needs is access to a confidential trial exam BEFORE the official examination. It could be used by the exam setters to ensure they are setting questions at an appropriate level, and it could be used by advisers to privately judge for themselves whether their existing skills are actually already good enough to get them through “the exam”, or whether they do actually need to return to study. With that facility in place, the powers that be would then be entitled to be much more careful about who they gave an exemption to.