One-off exam ‘not enough’ to lift adviser standards
Passing a one-off exam and signing up to a new code of ethics could be all some advisers need to do to meet the proposed new professional standards, but not everyone agrees that is enough.
Speaking to ifa, Independent Financial Advisers Association of Australia (IFAAA) president Daniel Brammall said there are some in the industry who do not believe that a single exam will make a difference.
"The reason being you can cram for it, pass it and immediately forget it," Mr Brammall said.
"It doesn't actually change the culture or the behaviour, and therefore, having one national exam really says that anyone who passed it was at this standard on this day.
"The chances are excellent, if there is no requirement to step back up to the plate, for that standard to slip," he said.
ifa reported this week that some advisers will need to complete some form of additional study to remain in the industry.
The government's proposed new professional standards for advisers are expected to be enforced by 1 July 2016, with transitional arrangements for existing advisers to begin in 2017 for a 2019 deadline.
Details are set to be worked out by an independent body, which may also consider the number of years an adviser has been practising as prior learning, and perhaps exempt him or her from undergoing further study.
This was introduced by the Parliamentary Joint Committee on Corporations and Financial Services, which said its view was that "even if existing advisers do not hold formal tertiary qualifications, years of practice have equipped them with knowledge and experience to provide effective and ethical advice to consumers".
Mr Brammall, however, does not agree.
"When people say, 'Well, I don't have a degree; I've been around for 20 years, I think I know enough', what that means – in my book anyway – is that they satisfied the year of professional training 20 times over," he said.
"Mind you, they've been doing it in an environment that we're hoping to never see the likes of again.
"You don't get to earn your stripes simply by being around in a dinosaur era. That doesn't mean it's irrelevant, but it's not entirely relevant to today. I think some level of professional education is going to be essential to ensure that everybody is on at least a basic footing."
AFA general manager of member services, partnerships and campus, Nick Hake, said it is crucial to get the balance right between the new level of education standard and the amount of time advisers will have to transition over.
"If the education water mark rises too high too soon, and as a result advisers exit the industry prematurely, then who will be left to pass down the skills to the next generation of financial advisers?" he said.
"Education takes time and it is supposed to be challenging. The key message as we look into the start of 2016 is 'start now'."
Most retirees fear outliving their savings: Research
Two-thirds of retirees in Australia who have been out of the workforce for at le...
SuperConcepts offers pro bono support to SMSF clients
AMP subsidiary SuperConcepts has announced free assistance to SMSF clients who h...
MLC Wealth hires tech, operations chief
MLC’s wealth business has appointed a chief technology and operations officer ...