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’.”
Patrick, so we could assume it would be perfectly acceptable to you that someone with only an Accounting or Finance degree could become a lecturer at University with no formal training in Education?
This happens all the time and may well be an indication as to why some of the results from Australian Universities may not be commensurate with standards from overseas!
They may well be technically brilliant and yet have absolutely no understanding regarding the process of learning and effective transmission of knowledge.
I have met some Accountants and Economists who couldn’t effectively explain how to peel a boiled egg to a client, but whose knowledge in their chosen field is exceptional.
If you actually read my commentary to the end before your head exploded, I mention that it is vitally important for ALL advisers to be technically competent and compliant.
If you are a financial planner and you think the industry is a joke, then it may be best you leave it.
If you are not a financial planner then a joke still exists and I will leave you to work out who that is.
[quote name=”Craig”]
I have a Bachelor Of Education degree and have been a financial adviser for 25 years.[/quote]
What does a bachelor of education have anything to do with financial planning?
Its people like you who have transitioned from a totally different degree like education into financial planning, that makes clients question whether all financial planners have the relevant skills and qualifications in finance and economics to help them.
Clients will wonder why is this person with a bachelor of education trying to advise me on financial planning shouldn’t they have done a bachelor commerce/business majoring in accounting,banking,economics,finance,financial planning or anything that is related to what you are advising them on.
Im not going to use a accountant who did a degree in Education i want one who has done a bcomm majoring in accounting/finance/business
Whats next art history majors becoming
financial planners.
This industry will always be a joke until we have higher educational standards and qualifications to become a financial planner
I have encountered university students with better understanding of finance and economics than some Financial planners who just did their diploma of financial planning with no undergrad degree related to the field. utterly disgraceful
You can NOT legislate for morals. Never have been never will be.
If you think me wrong, why are there laws about murder or theft etc etc
Looking forward to sitting the exam . Have lots of time and nothing better to do . Hopefuly its on line so that I can google all the answers .
I cannot believe how easy they make it .
Got 1.25 CPD;s yesterday for listening to a fund manager who put on a very nice lunch .
Going to spend some time this afternoon doing some Kaplan tax stuff.I hope its not too draining . Its Friday so hope to meet up with the lads for some hydration at 3.pm
You just have to love this industry
[quote name=”Johno”]I’ve held my real estate licence for 3 years now. I attended a 1 day course, did nothing in that, and got my full real estate qualification and licence based on ‘recognition of prior learning’ (i.e. experience). I pay my annual renewal fee, but do no CPD, no training, no education of any kind, and I could open a real estate firm tomorrow…
I reckon there’s more property bought/sold each year than there is new financial planning clients?
Maybe the regulartors, etc should be focusing their ideas on industries that are lagging way behind financial planning![/quote]
But Johno, there has been changes to compliance in Real Estate…. They abolished the need to disclosure commission payable on QLD properties haha.
Such a contrast.
I’ve held my real estate licence for 3 years now. I attended a 1 day course, did nothing in that, and got my full real estate qualification and licence based on ‘recognition of prior learning’ (i.e. experience). I pay my annual renewal fee, but do no CPD, no training, no education of any kind, and I could open a real estate firm tomorrow…
I reckon there’s more property bought/sold each year than there is new financial planning clients?
Maybe the regulartors, etc should be focusing their ideas on industries that are lagging way behind financial planning!
So one can assume that those making the policy standards for our industry have the necessary qualifications to do so. We should demand to see the qualifications of our politicians and their further educational training and PD skills for, the relevant portfolio’s they hold. I am sure Josh Frydenberg has been upskilled in the resource sector to comment on nuclear and mining issues. I am at a loss to see any other industry or profession get hammered as much as ours and our professional organisations keep telling us it’s the best outcome! Enough is enough!!!
So we can therefore assume that once the new professional standards have been determined and implemented that the government will then cease dictating the remuneration terms to the professional advisers?
I can’t remember the Govt dictating remuneration to Lawyers, Accountants, Doctors, Engineers,and Architects despite the fact that some of these professionals may be utterly incompetent and act in an unprofessional manner!
I have a Bachelor Of Education degree and have been a financial adviser for 25 years. I know that my 4 years at university understanding the theories and psychology of learning and providing me with the ability to break down complex information into simplified concepts that can be understood and related back to an individual’s situation and position has been an invaluable skill in the transmission of knowledge.
However, this is absolutely not an essential requirement to be treated as a professional, simply because some people are born “teachers” and communicators whilst others are technically brilliant but cannot identify a breakdown in the presentation, receipt or understanding of complex information.
Experience does count and although it is vitally important all advisers are technically competent and compliant,it is equally important that ethics, empathy and communication skills are recognised as an integral and highly valuable component in the provision of advice.
[quote]Should we then ask all the Qld teachers who completed the diploma of education, now sit for a degree or one off exam to continue to teach?[/quote]
In NSW, teachers went through an upgrade from 3 year trained to 4 year trained 20 years ago. Existing teachers had to go back for extra study.
Now, Aussie teachers have this – http://www.aitsl.edu.au/austra…
Clearly defined outcomes and standards.
They are so, so far ahead of the financial planning profession.
Should we then ask all the Qld teachers who completed the diploma of education, now sit for a degree or one off exam to continue to teach?
The problem with an exam as I see it is that it will be set by regulators who only have limited knowledge of what occurs between Advisor and Client. The questions will likely relate to investments and the more technical side of things. A good planner, of which there are many, does a whole lot more than that.
We discuss cash flow, we form strong long term relationships that develop a deep understanding of who the client is rather that what they have in terms of investable assets. We give them information and advice that works in the real world. We understand what is really important to the client and often times we hold them to account for taking the steps needed to achieve the things that are important to them. This is what so many clients value rather than our technical knowledge.
Probably just offended some very experienced advisers out there.
Missing the point completely. There has not been an argument of any substance in the recent years around technical competence, it has always been about ethics and conflicted models run by the large insto’s which the industry funds are now mimicking.
All you need is a professional standards board (PSB) with the power to review complaints and suspend or terminate licences. It’s that simple. FOS after the PSB review can then decide on the financial settlement if they must continue to exist.
My wife is a doctor and what she has to go through to get one CPD point is way below what I need every year for my points. I also have FPA, SMSF Assoc and TASA,40 points for EACH one, although some do cross, and I need an exam as well?? Really??
Technical competence is not the issue, it is ethics and this is clearly where the problem lies.
When will all these show ponies and self interest groups play the real issue and not cloud it with yet more regulatory load on an already overburdened profession?
Daniel I have been an adviser 28 years and in that time have self educated myself with courses to make my business and myself better at every aspect of the planning cycle, this is on top of the 30 to 40 hours of compulsory exams I do each year to have the honor of calling myself a Financial Adviser, I think you are saying that every professional including Doctors Lawyers accountants etc have to re qualify every year, that is not very appropriate or realistic, education will not stop crooks being crooks and in some cases its the education that helps them be crooks, so don’t put any extra pressure on an industry that has been extremely unfairly treated.
Not enough? Ever sat a CFA exam? Depends on the actual exam; To think a rigorous exam combined with strict CPD isn’t enough when it is in other professions is ludicrous.