According to the draft bill unveiled yesterday, by 1 July 2019, existing advisers must either have a degree or have completed one or more courses that give the advisers “qualifications equivalent to the standard”.
The courses will be determined by an independent, industry-established body, set to begin operating from 1 July 2016. The body will also develop a code of ethics for advisers and new CPD requirements.
Further, it will approve the exam that all advisers will need to pass by 2019.
The draft does not say that advisers’ number of years of experience will be considered into the transition pathway, which was recommended by the Parliamentary Joint Committee on Corporations and Financial Services.
Meanwhile, new advisers will be required to hold a degree, undertake a professional year and pass an exam. The education and training requirements will be effective from 1 July 2017, with the code of ethics requirements to be enforced by 1 July 2019.
In a statement, Assistant Treasurer Kelly O’Dwyer said, “These reforms, recently announced in the government’s response to the Financial System Inquiry, have widespread support across industry participants, professional bodies and consumer representatives of the need to raise standards for financial advisers in order to improve public confidence and trust in the sector.”
“The government recognises the importance of appropriate transitional arrangements to ensure that the skills and experience of existing financial advisers is acknowledged.”
The draft bill also outlines the obligation for licensees to notify ASIC of any breaches – or alleged breaches – of the new code of ethics.
Further, it states that a person is illegally using the terms “financial adviser” and “financial planner” if he or she carries on a financial services business or provides a financial service and is not authorised as a licensee or on behalf of a licensee.
In a seperate announcement, Ms O’Dwyer said the government has also released the draft legislation for the life insurance sector which she reiterated will “ensure that the interests of financial firms and consumers are better aligned”.
According to the AFA, the draft legislation will only be open for public consultation until 4 January 2016.
“We are concerned about the timeframe in which the government is seeking valuable feedback from the AFA and other key stakeholders and will express this concern to the government,” said AFA chief executive Brad Fox.
Prospecting, what is that panning for gold? I thought the most important part of being a good adviser is putting the clients interest first…..
Agree 100% Nigel. Self licensed advisers IS the solution however the application process for the license might be just like that of an AFSL…or at least very similar.
[quote name=”Nigel”]Matthew, I tend to agree with you, however I think it would be best if the nature of AFSL’s was rethought and simplified. Perhaps moving more toward each adviser being licenced and the current dealer groups then become compliance providers / aggregators to self licenced advisers. I believe it is silly to have advisers giving advice but the licencee responsible for the advice. Make the giver of advice responsible for it. If an adviser is clearly acting in a manner that they should not, cancel their licence – it only effects them not a whole dealer group and they can’t simply move to another dealer group. I believe a much better system, but probably will not happen anytime soon. [quote name=”Matthew Ross”]What needs to change is the culture of financial planning and by this I mean the culture that most financial planners are operating.
Financial planners within vertical integrated environments are ethical and are not evil. It’s the environment itself that is unethical and evil because the PRIME purpose is to push and protect FUM.
The PRIME purpose outside vertical integration is the client.
Study doesn’t change this. Financial planners deciding to not operate in this environment will. What is needed is a financial planning course on how to apply for your own AFSL and how to run a profitable, ethical, independent, client centric business.[/quote][/quote]
Julie M sounds like youi need some good old fashioned training by us fossils as you say and it may help you get over that chip on your shoulder about working for a bank where all your supper is served up to you on a plate and you would not know the first and most important part of being a good adviser and that is PROSPECTING where you have to get your own Clients, so maybe do some work and get off of here moaning away.
Matthew, I tend to agree with you, however I think it would be best if the nature of AFSL’s was rethought and simplified. Perhaps moving more toward each adviser being licenced and the current dealer groups then become compliance providers / aggregators to self licenced advisers. I believe it is silly to have advisers giving advice but the licencee responsible for the advice. Make the giver of advice responsible for it. If an adviser is clearly acting in a manner that they should not, cancel their licence – it only effects them not a whole dealer group and they can’t simply move to another dealer group. I believe a much better system, but probably will not happen anytime soon. [quote name=”Matthew Ross”]What needs to change is the culture of financial planning and by this I mean the culture that most financial planners are operating.
Financial planners within vertical integrated environments are ethical and are not evil. It’s the environment itself that is unethical and evil because the PRIME purpose is to push and protect FUM.
The PRIME purpose outside vertical integration is the client.
Study doesn’t change this. Financial planners deciding to not operate in this environment will. What is needed is a financial planning course on how to apply for your own AFSL and how to run a profitable, ethical, independent, client centric business.[/quote]
What needs to change is the culture of financial planning and by this I mean the culture that most financial planners are operating.
Financial planners within vertical integrated environments are ethical and are not evil. It’s the environment itself that is unethical and evil because the PRIME purpose is to push and protect FUM.
The PRIME purpose outside vertical integration is the client.
Study doesn’t change this. Financial planners deciding to not operate in this environment will. What is needed is a financial planning course on how to apply for your own AFSL and how to run a profitable, ethical, independent, client centric business.
JulieM, just be careful of believing the HEAVILY vested interests of the big financial services companies, banks and industry funds that keep using you, I and all other professional planners as football to keep the vertically integrated self interested investment product structures in place.
Thus far it has been very Machiavellian and very effective.
Also don’t delude yourself on the value of a uni degree. Personally I have an undergrad in engineering and a masters in business and finance. All this did was allow me to apply for certain jobs, my learning started when I commenced employment and with practical learning and mentoring. Uni taught me how to think and how to speak the professional language of the chosen profession, not how to do what I do now, or what I did when I was an engineer. This is true of all degrees except perhaps for medicine.
Medicine ironically is more a a “trade certification” as they are more fit to practice their trade on graduation, like a trade, than any other uni graduate.
And I repeat again, an exam doesn’t equal ethics and I am not sure what widespread problem we are fixing with an exam, there is no evidence to support this misplaced initiative, just political and vested interest rhetoric.
No-one should be allowed to gain a certification without a degree and a PY. (Btw I had this argument with the FPA in 2001 but they disagreed then!) Asking someone with 20 years experience AND 20 years of CPD to do an exam so they can keep their job is just ridiculous.
Wildcat, there are bad apples to be found in many necks of the woods, and I’m not denying that bank planners haven’t been a big part of the problem; sheer scale dictates otherwise. What I am decrying is that there is always some fossil out there who bemoans having to make changes and blames an entire segment of the advice industry for it. I agree that an exam or a degree doesn’t have anything to do with ethics, but I wholeheartedly support education requirements being lifted because we should be trying to become a “profession”. You can’t be a doctor, lawyer, dentist, etc without a degree. Why should you be able to be a financial planner without one? Years at the University of hard knocks or not!
No where it says what degree is required?
They should specifically say Bachelors of Financial Planning or some related degrees means commerce ,economics finance,accounting coupled with DFP or ADFP.
Is not it confusing someone might think Bachelor of Fine Arts etc as we have hundreds of Bachelors and I have actually seen it .
How many degree holders are in Cabinet?
Degree Degree Degree?
The new standards are here for a reason. I do mortgage broking as well and there was someone who paid for a speaking spot to preach to the brokers that they were a ‘lifey’ not a financial planner and were quite proud of this and negative towards other planners. There is nothing positive that can come from bagging out others in the same industry. Didn’t Storm involve some FPA member not aligned planners? There have been issues with independents and aligned planners in the past, let’s focus on the future.
JulieM, every auditor banning and EU makes the financial press from ASIC. There are few IFA’s but nothing of the volume of EU’s and not even close to the affected clients in the insto space. It true however it is often the few bad apples even in the insto’s.
I know there are great planners in the insto space, some of them are my professional colleagues whom I respect.
The fact remains, and staying on the issue, exams ethics, there is no correlation whatsoever in that relationship.
[quote name=”James Reynolds”][quote name=”Angelique McInnes”]
I couldn’t agree more Angelique. The public deserve to be able to engage with the financial planning industry without having to worry that there may be questionable motives behind either the product or strategy or any part of the advice process.
Whilst there are challenges, they aren’t insurmountable. This focus on lifting the industry is a welcome one.[/quote]
Perhaps James you are correct however technical expertise of Commbank/AMP/Macquarie/IOOF/(insert large Insto here) advisers was NEVER in question.
It was their ethics and sales product driven rem structures that did.
This exam has nothing to do with ethics and everything to do with continuing to wallpapering over the conflicted institutional framework that drives corporate profits.
An exam solves none of this.
[quote name=”Paul”]Legitimate CFPs should be exempted from any new requirements because they have already jumped through all those hoops at a much higher level.
Unfortunately there is currently no public way to distinguish between legitimate CFPs, and the grandfathered CFPs who have not met the same standards. Come on FPA, do the right thing and downgrade the grandfathered CFPs to AFP status until they meet the degree and exam requirements.
No matter what industry insiders say, this whole argument about experience and basic training being a sufficient substitute for high level education does not meet community expectations, and never has.[/quote]
100% spot on.
I have been at the FPA in relation to this issue for years.
I am quite young but have also been in the industry about 7 years now… Obviously all of these changes are frustrating but think of all the people who are or were considering just getting into the industry… Much harder for them.
Thing is change is absolutely needed.
Donald Wayne Brown: You may be tired of paying a price but I am tired of people like you tarring all bank planners with the same brush. There are many of us who are experienced, educated, and doing the right thing by our clients. We all operate under the same Best Interests Duty last time I checked! You also seem to forget that there have been plenty of bad advice given by IFA advisers, but it just isn’t as media-worthy. If after all of my years at the University of reality and hard knocks I can bring myself to complete a degree, why can’t you??
Legitimate CFPs should be exempted from any new requirements because they have already jumped through all those hoops at a much higher level.
Unfortunately there is currently no public way to distinguish between legitimate CFPs, and the grandfathered CFPs who have not met the same standards. Come on FPA, do the right thing and downgrade the grandfathered CFPs to AFP status until they meet the degree and exam requirements.
No matter what industry insiders say, this whole argument about experience and basic training being a sufficient substitute for high level education does not meet community expectations, and never has.
Imagine if the politicians of each portfolio had to have a degree in that field we would not have a government so this is totally ridiculous asking us to have a degree. I have 28 years of experience from the University of reality and hard knocks of doing what is right for my clients and if ever I have been asked for advice that I did not know the answer to off the top of my head I would tell the client I am unsure to the answer and seek the answer from the correct source. I am tired of the price we are paying for all these bank advisers ripping off clients and us all being painted with the same brush for their greed. I say to Kerry Odwyer who is the minister for small business that if she does not take a stand on all this regulation that she will not have any small business to represent as she is working towards destroying the Independent financial planners.
[quote name=”Angelique McInnes”]Significant change is necessary, albeit with many what seem to be insurmountable challenges and difficulties. We have no other option than to be brave and make the changes to maintain and regain the trust and confidence of the Australian public, because it is what the Australian public expect and are asking for..[/quote]
I couldn’t agree more Angelique. The public deserve to be able to engage with the financial planning industry without having to worry that there may be questionable motives behind either the product or strategy or any part of the advice process.
Whilst there are challenges, they aren’t insurmountable. This focus on lifting the industry is a welcome one.
Ms. O’Dwyer should be congratulated.
Existing advisers having a degree or have completed one or more courses that give the advisers “qualifications equivalent to the standard” goes along way to cleaning up the image of the industry in light of the Macquarie Bank issue and CBA open issue’s.
Kind regards,
Adrian Totolos.
Business Analyst.
I have to agree with previous commentators who have highlighted how some of the greatest problems of the past have been created by highly educated people. Educate the consumer to be discerning. They form the market that decides – they will decide what works all by themselves – government intervention in markets needs to be light not heavy. Heavy gives consumers a false sense of security – this is a clear example.
Neil, I hope the FPA try grandfather the grandfathered CFP’s again. It will expose them. I agree that experience should count for something…but not everything. I refuse to consider the CFP designation because of the grandfathered CFP’s. Many are good..too many are terrible!!!
Interesting. On that basis , can we separate old versus new CFP’s ?
The FPA has not wanted to know about this difference for years !
Btw , I have a degree but do not believe that 15 years experience is irrelevant.
No one with half a brain would.
As stated before please show me the “qualifications equivalent to the standard” of those making these decisions. I would also like to see the continuing further education of these ministers in the portfolios they administer. As for a code of ethic I would say to both parties lead by example!
We need to make a united stand and say enough is enough.
I wonder if telephone advisers working for the ISN network have to jump through all these hoops and hurdles as well or are they conveniently excluded?
If the government believes that imposing additional education requirements on current day experienced advisers is going to make a difference to consumer confidence, they are kidding themselves.
Education has nothing to do with ethics and integrity. Its often the most educated people who manipulate the system and screw people over – not the so-called dummies out there doing the right thing by their clients.
This is just another (unfair) smoke screen in my opinion.
Who pays for all this extra education by the way?
We’re already having our remuneration cut, compliance obligations lifted to ridiculous levels and responsibility periods doubled.
What’s next????
What a joke, if I go looking for a professional I want someone with experience not a fresh face kid who is trying to be a suburban Warren Buffet. None of these items will change the way advice is given while you still maintain a direct link to the Product Manufacture/Bank.
I read many an SOA from competitors and its all product focus, they claim strategy is linked to Managed Funds or worst BRAND
If they want to really clean up the industry, break ties, kill commissions of all types and make every Adviser hold his own AFSL, then and only then to you really get a chance to clean up the industry.
A degree is simply the body of knowledge and I have no issue with having it as a prerequisite. In saying this experience is what enables you to build a real knowledge bank thus making your advice valuable.
Significant change is necessary, albeit with many what seem to be insurmountable challenges and difficulties. We have no other option than to be brave and make the changes to maintain and regain the trust and confidence of the Australian public, because it is what the Australian public expect and are asking for..
I hope they recognise those who have completed Business/Commerce/Economics/Finance degrees.
These degrees have always proved solid foundations for concepts and knowledge prior to specific Financial Planning degrees being designed / available.
[quote name=”Troy”]Make sense to exclude experience – its what has happened over the preceding 20+ years until now that we don’t want to be happening in the future. Might be a shame for a lot of older advisers who have always done the right thing but all for the better. Unfortunately education will not stop those doing wrong but nothing will ever stop them. its a good start.[/quote]
Not counting some of the experience unfortunately will lead to adviser numbers decreasing substantially with so many advisers being older and close to retirement.
We have to be careful that we do not end up with an industry of 20 something full of degrees and no experience and no one to give them their professional year!
I was listening to a doctor speak on ABC radio yesterday about the importance of ongoing education, given that what is studied at uni is largely forgotten after 20 or even 10 years. He said that he was continuously re-learning what he’d studied at uni and keeping up with changes in his profession since. One would think this would apply in any profession. So our focus needs to be on future ongoing education moreso than prior learning.
I like the fact that experience alone isn’t considered an automatic pass. I’ve encountered plenty of very experienced advisers who know a lot about insurance and client engagement but are seriously lacking when it comes to many other topics like super, centrelink and investments.
One of the worst examples I encountered had almost 30 years experience and was talking to clients about superannuation rules from over 5 years ago! A relatively inexperienced student paraplanner picked up the error.
Make sense to exclude experience – its what has happened over the preceding 20+ years until now that we don’t want to be happening in the future. Might be a shame for a lot of older advisers who have always done the right thing but all for the better. Unfortunately education will not stop those doing wrong but nothing will ever stop them. its a good start.
No problem with the qualifications proposed. I used to think I knew enough, but having started doing a degree, I have been pleasantly surprised at all the gaps in knowledge that I’m filling in. The exam and the code seem useless without acknowledging experience though. Shouldn’t “obey the law” be our code of conduct? A one of test can be daunting and people don’t work in exam like conditions, they work with an open book and share knowledge in a team to get the best advice.
Interesting to see how this plays out. I am unsure how this will work for people who have been advising for years but perhaps stepped back from being a authorised rep for a period of time (as I am considering to complete study).