While the government plans to set up a two-tiered advice system – allowing employees of superannuation funds, insurers, and banks to be recognised as “qualified advisers” authorised to offer financial advice – Keith Cullen, the managing director of WT Financial, believes advice firms should also be offered the opportunity to hire these advice providers.
In the legal profession, he noted, firms have a hierarchy comprising paralegals, junior solicitors, solicitors, and barristers. Conversely, the demanding qualifications for financial advisers result in a staffing structure predominantly composed of professionals equivalent to KCs, the highest rank in the legal field.
“The higher education standards mean there is only one type of adviser now, everyone is a KC now, and not everyone needs that level of advice. You wouldn’t ask a KC for legal advice on buying your first house, for example.
“We’d like to see practice principals who can hire these simple advisers; they shouldn’t only be for super funds. At financial planning firms, they could be used for simpler transactions which don’t require a full statement of advice, who only want simple advice.
“Simple advisers should be able to charge a modest fee and operate at an advice firm. We need to keep working with the government to swing the pendulum back.”
Commenting on Cullen’s proposal, Eugene Ardino, chief executive officer of Lifespan Financial Planning, said “it’s an interesting idea”.
“I think any suggestion that frees up actually qualified advisers to spend more time with clients and solving more difficult scenarios for clients should be considered. For it to work we would need to define what they could and could not do – a similar framework we need for what’s currently been proposed in my view,” Ardino told ifa.
He also stressed the need to find a “better name” for these advice providers.
Earlier this week, ifa reported that similar to the sentiments expressed by the majority of the financial advice community, Allens, where Michelle Levy holds a partnership, finds it “curious” and “potentially confusing” that the government would choose to label the new class of advisers as qualified advisers, especially considering they will be held to a lower standard of education.
As discussions continue in the ongoing Treasury roundtables in Canberra, the industry is particularly interested in learning what term the government will choose for describing advice providers not deemed relevant and employed by major institutions.
In December, Financial Services Minister Stephen Jones announced that these providers would be referred to as qualified advisers, with the title requiring only a diploma. Unsurprisingly, financial advisers were outraged considering the painstaking effort they had undergone to attain their professional recognition.
While the QAR reviewer, Levy, didn’t publicly declare her thoughts on the minister’s final response to her findings, her law firm, Allens, did at the time release a statement dissecting every detail.
Last month at Senate estimates, Treasury officials found themselves at a loss when faced with inquiries from Liberal senator Andrew Bragg about the origin of the term qualified adviser.
Taking the lead in responding to the question, Andre Moore, assistant secretary of the advice and investment branch, stated that the term was a “decision of government”.
“A number of potential names had been raised by various stakeholders.”
When pressed by Bragg to identify these “stakeholders”, Moore responded, “I’d have to take that on notice, I don’t know.”
Not a good idea. Banks and Stephen Jones’ Industry fund buddies should not be in financial advising full stop. This has already been solved via the Royal Commission and all the money spent on enquiries. The fact that we have not enough qualified advisers in the true sense of the word, not enough teachers, not enough nurses, childcarers, aged care workers and did I hear soon farmers – is because the government has made BAD decisions without understanding the industry they are affecting. Keep going and Centrelink will be in more of a mess!
Surely not! The harvard trained elite financial planning fraternity shouldn’t have to put up with the ‘used car salesman’ or ‘the back packer’ unwashed qualified adviser – it is so much beneath them
Can’t see many advice practices flocking to this idea Keith as they don’t flog super funds and insurance policies unlike the industry super funds and insurance companies that do…
If this Diploma qualified adviser comes into an AFSL firm, you are extending the reach of “product” beyond the (member’s) balance in the particular superfund. That Dip Adviser will need to have a broader understanding of financial products, for a start.
I do however wonder what commentators view as “simple advice”. That is an oxymoron when used in a sentence involving financial services.
Even a low balance member of an Industry superfund, for example, could have a low level of group insurance. So we already have complex advice areas – super and insurance. The job wouldn’t be done without some estate planning and even aged care. The Code isn’t allowing a simple single solution piece of advice. There is a lot more work to do here and, for my reckoning, the parameters should be the Dip Adviser can only advise on contributions, pensions and death benefits for their own product. They would have to be able to run a cashflow but that is it.
When defined like this, what AFSL firm would want this client?
I suspect the real energy around this potential is to do with simplification. We all want that from QAR but Jones is only interested in boosting Industry Fund capability. So here we are, rather than talking about replacing the SoA with a meaningful form of advice with compliance in the backend, not front and centre for the client, we are trying to solve the Dip Adviser positioning.
Interestingly, the Libs initiated the QAR with the pre-planned objective of raising tech solutions to aid advice efficiency – extend reach but completely ignored strategic advice which, is where the hole is. As it stands, strategic advice is complex and unless the recommendations of QAR are seriously embraced, we will continue this conversation forever.
The LNP instigated QAR to try to look to appease somewhat the very angry Adviser community post RC, LIF & FARSEA.
The LNP’s only real interest was to find a way for the Banks & Life Co’s to get back in via Robo sales advice.
And the ALP only care about Industry Super also being able to flog their single products via Call Centre sales.
QAR was and only ever will be about product flogging.
It never had anything to do with Real Advisers being given a lot of relief.
All this idea of having a 2nd tier called ‘qualified advisers’ proves is:
a) Jones has no idea about financial advice
b) Jones sole agenda is to help his ISF buddies
Why is this even being proposed before true Advice Legislation reform???
Haha. I love the lateral thinking. The cat is amongst the pigeons now!
Yes, a complete unwinding of the profession. Under this “Qualified Adviser” model we would end up with 5,000 professionals and 30,000 advisers giving advice out of the cornflake box – flogging their employer’s product just like in the old days. What a joke!
Of course its really All about Industry Super and their vetically owned, single product, sales agents that will be paid by mass HIDDEN COMMISSIONS FOR NO SERVICE to most ISA members.
Of course it’s a good idea to allow Real Advisers to also utilise Junior Advisers (like we have for decades pre FARSEA), to deal with lower level, less complicated clients with the support of Real Advisers to support them.
But Real Advisers can’t charge HIDDEN COMMISSIONS to pay for the Junior Advisers can they.
Real Advisers totally stitched up yet again.