Late last year, the Financial Services Minister, Stephen Jones, announced that not only does the government want to see superannuation funds expand their advisory powers, but it also supports the creation of a new class of financial advisers – “qualified advisers”.
“Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters,” Mr Jones said.
“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.”
Predictably, the financial advice profession was outraged by the government’s choice of term, particularly given that the fight over advice qualifications has been a long and messy one.
ifa earlier learnt that the minister would reconsider the term over the coming months.
This has now been confirmed by the chief executive officer of the Financial Advice Association Australia (FAAA), Sarah Abood.
Speaking at an event held by PritchittBland Communications on Wednesday, Ms Abood said that, according to the minister’s reassurance, the word “qualified” was intended in the sense of caveated or restricted. However, having taken into account the dissatisfaction among advisers, the minister has assured the FAAA that he is welcoming suggestions regarding a more appropriate term.
“The minister has let us know that the term is not set in stone and alternatives will be considered during the next phase of consultation,” Ms Abood shared.
The FAAA is currently polling its member body to gauge their thoughts on the best appropriate term.
Ms Abood also spoke about the need to ensure employees of institutions have an appropriate level of education – another area of the government’s response that is set to undergo further scrutiny.
“We think it’s important that minimal levels be legislated and that those levels be set commensurate with the type of advice that qualified advisers are going to provide. This is critically important to ensure that these people can give clients advice that is genuinely in their best interest,” the CEO explained.
She noted that minimal levels of education are also an “important insurance” for employers of these advice providers.
“It’s the employer that will have the duty to ensure that that advice is not just good advice, because we know that good advice is gone, but that it’s the best interest of the client that will be the test and that’s a high bar,” Ms Abood said.
“We are also suggesting that the education requirement should fit into the current financial advice ecosystem of education that already exists.”
The latter would create a pathway for these qualified advisers to one day become fully-fledged financial advisers, Ms Abood said.
“This would also mean that qualified advisers could play a substantial and positive role in rebuilding the profession and the numbers of professional financial advisers.”
She emphasised the importance of ensuring there are safeguards to ensure that the new legislation doesn’t reverse the years of hard work that have gone into the professionalisation of advice. This would also include appropriately defining “simple”, Ms Abood said, to evade issues that were had with general advice.
“We’ve said they can provide simple advice, what do we mean by simple?”
Ultimately, Ms Abood said, the key is to safeguard the profession alongside the consumers of advice.
“What a tragedy it would be if we turned the clock back to a pre-royal commission time when the RG146 requirements technically could be achieved in a weekend.
“We all saw what happened then, and I don’t think any of us want to go back.”
They created the mess and now they claim to be fixing it by calling product sellers “qualified advisers”!
Lets face it. This is about product industry funds – who are essentially product issuers – masquerading as advice providers. This is the conflict that was identified by the RC and resulted in the sustained attacks on advisers , destruction of the value of advice businesses, loss of around 50% of advisers and, increased costs to consumers. Under insurance is now an epidemic while insurance premiums and the cost of advice have skyrocketed.
As HNW clients are now exiting the industry funds, off the back of bespoke advice, there is now the political will to stem the flow. Now that the advice industry had been gutted the passage for the industry fund’s product salespeople to provide “advice” should be a smooth one.
It is galling to hear politicians bleat about the lack of access to advice when they have engaged in a sustained attack on us for so long.
Its a joke. The pain, cost and trauma the Government has put advisers through to adhere to a higher standard of qualification and practice before we can advise anything to a client about super and other matters is substantial. The Royal Commission exposed the level of corruption and malpractice by the large institutions far exceeding that of advisors. And then to turn around and say that super funds can provide advice again by minimally qualified people (sales people) is beyond belief and reaks of a total lack of understanding and disregard for consumers and advisers and the profession as a whole.
The proposed name “Qualified Adviser” is totally misleading to the general public. Its an absolute disgrace that Steve Jones is even considering it as an option. He is clearly playing along to the Union controlled Superannuation Funds. Seriously, give me a break.
Financial Baboon is my pick.
The proposal to use the term Qualified Adviser probably started as a joke or word game over a few late night drinks in a Canberra bar with cogitations over the two opposing meanings of the word “qualified”. In 1. people who have completed courses and gained practical experience are considered to be knowledgeable and competent to do certain tasks. In 2. the meaning is that a performance has limitations or reservations, such as “a qualified success”.
Use of the term “Qualified Adviser” could mislead people into believing that “Qualified (type 2.) Advisers” are qualified in the type 1. sense, while those who qualify (type 1.) to be Financial Advisers are actually unqualified to call themselves Qualified. This could, understandably, mislead the public to believe that Qualified Advisers were qualified, while Financial Advisers were not. This verbal pea and thimble trick about the word “qualified” is not the worst example of misleading use of language.
Even worse is the legal endorsement of the misuse of the word “advice” in S766B of the Corporations Act that defines any “recommendation or a statement of opinion” about a financial product as advice, which it separates into Personal Advice, which restricted to Financial Advisers (for retail clients) and General Advice. This gives information provided by product providers about their products the legal status of advice. By extension, the people who provide that “advice” have legal grounds to call themselves “advisers”.
This is why we have our present situation of requiring a Relevant Provider register. All of the people on that register will, initially, be Financial Advisers, but the intention is that other types will be included, when the legislators finally decide what those people will be called.
As legislation presently stands, anyone providing information about financial products will have prima facie grounds to describe themselves as advisers, even though a realistic view is that they are actually sales representatives, restricted to the range of products they are paid to represent.
Until a government finally bites the bullet in the misleading definition of product information as advice in S766B, the financial industry will always have the issues of conflicted “advice” that surfaced in the Hayne Royal Commission. It took two decades to disclose the distortions inherent in the legislation, it may take another Royal Commission to put the finger on the true culprit, a legal definition of “advice” that destabilises that basic foundation of “financial advice”.
That is the fundamental pea and thimble tick undermining financial advice.
I have just seen a quote by Minister Jones in relation to this very important matter.
” We’ve set out a framework,(there’s) a bit of excitement amongst the adviser profession around nomenclature-if that’s the biggest problem we’ve got then it’ll be pretty easy to fix” !!!!!!!!!!
It is difficult to grasp how a very senior Minister responsible for the future legislation around Financial Services and Advisers can be so ambivalent, so dismissive and so irresponsible in relation to exhibiting such a complete lack of understanding of the impact of what he does and says on the professional Financial advisers in this country.
He announces a ridiculous term of ” Qualified Adviser” which throws the whole industry into turmoil and despair and then simply offends them all by stating ” there is a bit of excitement amongst the adviser profession” and even more by ridiculing them by insinuating they are making a mountain out of a molehill.
Well Mr Jones……you cease announcing mountains and we will deal with the molehills.
I have just seen a quote by Minister Jones in relation to this very important matter.
” We’ve set out a framework,(there’s) a bit of excitement amongst the adviser profession around nomenclature-if that’s the biggest problem we’ve got then it’ll be pretty easy to fix” !!!!!!!!!!
It is difficult to grasp how a very senior Minister responsible for the future legislation around Financial Services and Advisers can be so ambivalent, so dismissive and so irresponsible in relation to exhibiting such a complete lack of understanding of the impact of what he does and says on the professional Financial advisers in this country.
He announces a ridiculous term of ” Qualified Adviser” which throws the whole industry into turmoil and despair and then simply offends them all by stating ” there is a bit of excitement amongst the adviser profession” and even more by ridiculing them by insinuating they are making a mountain out of a molehill.
Well Mr Jones……you cease announcing mountains and we will deal with the molehills.
Financial Officer would be what I would pick.
Whatever the term is, it shouldn’t include the word ‘Adviser’. As they can only discuss their employer’s product, it should be something like ‘Product Information Expert’. Advice should only be allowed to be given by professional Advisers.
The reason that the word “adviser” can validly used to describe this new form of Relevant Provider is that S766B of the 2001 Corporations Act legalises it. It defines Financial Product Advice as “a recommendation or a statement of opinion” intended to influence investment in a financial product. So promotional activities of a representative of a product provider is legally defined as “advice” and it follows that a person giving that “advice” is an adviser.
Like Humpty Dumpty, who told Alice that “a word can mean anything I want it to mean”, S766B defines information provided by a representative of a product or range of products as advice. An egg sitting on the top of a wall is obviously vulnerable to a fall. The definition in S766B has been a major crack in the foundations of financial advice that was behind many of the abuses revealed in the Royal Commission arising from major institutions using their positions as major licensees to direct investments into their products and platforms.
The present situation could turn out as a repeat of past errors. This time around, the trusted institutions are not insurance companies, they are industry super funds. These funds have, and will continue to have, an important role in building retirement savings for most Australians. But can they really be considered as providing financial advice when their representatives are restricted to giving “advice” on the range of procts they represent.
What could go wrong? We will find out in the next Royal Commission.
They are paid product salespeople who can legally earn production bonuses. All paid for from the industry fund members account without their consent. But they are definitely not “advisers”.
Institution’s sales employee.
They are not advisers. They are tied agents to their employer.
Why does no one want a sales person to be identified as a sales person?
Common sense would state that ‘Unqualified Adviser’ is exactly what this category should be termed.
Employed Adviser
So if your employed by a Financial Planning practice with no association to Product manufacturers – what are they?
They should not be termed ” Advisers ” at all, irrespective of the prefix or description.
They simply should be referenced as firstly the name of the Super fund ie. Australian Super & secondly, they should only be called Member Representative.
So, a member contacts the fund’s call centre and is directed toward an Australian Super Fund Member Representative.
Or a HESTA Super Fund Member Representative etc. etc.
This then must be very clearly defined and acknowledged & accepted by the member prior to proceeding with any discussion that the information provided will ONLY be in relation to the benefits available through that super fund only.
The term ” Adviser ” should not be used under any circumstances as it mistakenly provides a perception the member is receiving unrestricted and broad advice without the restriction of solely information that is specific only to the Super fund that pays their salary.
Totally agree – it’s completely misleading for an industry superfund (or any entity for that matter) to promote unqualified call centre staff as “advisers” – and to an earlier comment – insulting to diligent, professional (and fully qualified) financial advisers. It shows how little Stephen Jones (and the government generally) rates our profession.
Restricted Adviser is the perfect term
What about Resident adviser…in line with new medical staff starting out in hospital system
And just what is similar to a new Medical Staff who has a degree?
“SuperFund Agent” “Employed, Conflicted Adviser”
Lets call them what they are, Union Reps.
The arrogance of the industry fund sector is palpable. The damage they could cause by promoting conflicted, unqualified and shoddy advice as ‘qualified advice’ beggars belief. I’m shocked (but shouldn’t be) that a minister of our government would so naively support such as term as ‘qualified adviser’ for people who are clearly not. It sends such a disingenuous and misleading message to regular Australians and is such an insult to fully qualified professional financial advisers. Let’s look at titles which are a bit less misleading – customer service officer, phone-based support officer, member liaison officer, etc. Any reference to ‘adviser’ is a potential breach of s923A.
100% agree, but given the track record by all of the previous Financial Services Ministers, not shocking at all.
Can you separate the[b] water[/b] flowing from the river into the sea?
[b]You can’t[/b]. It is the same if we call the less and fully qualified advisers by the same title.
If the minister insists on going ahead, let him reverse all the laws back ten or fifteen years ago so that everybody will be on the same level field. Of course, Royal commissions will be back years later and this is the destiny that Jones will bring.
Or else, we all (if you like) go to work for the banks, insurers and super funds so that we can all enjoy the relaxed environment!!!
I doubt it was naive at all.
This was completely intentional.
How about “Superfund Member Advisers”?
“What a tragedy it would be if we turned the clock back to a pre-royal commission time when the RG146 requirements technically could be achieved in a weekend.”
Umm – that’s exactly what is going to happen.
“Qualified Adviser”
What an abject, unmitigated disgrace.
BTW – Where is the relief we were promised eons ago ?????