Speaking on a Financial Advice Association Australia (FAAA) webinar last week, chief executive Sarah Abood said there is no consensus on whether the FAAA should support any new class of adviser that would be introduced through the second tranche of the government’s Delivering Better Financial Outcomes (DBFO) reforms.
First announced in December last year, there are still few details about exactly how the new class of adviser would work when it is eventually introduced. However, the FAAA wants to hear from members on whether it should include them.
“A specific question we’ve asked members to get back to us on is should we be supporting the new class of adviser?” she said.
“There’s views on both sides. At the moment, I don’t think that there’s a strong view either way. We have some members who are saying, ‘yes, absolutely, you should support them. We need to ensure that they’re doing the right thing, that they become a feed through class of member to full professional advice that we’re kind of keeping an eye on them and ensuring that the advice they provide is good and is not going to bring the profession into disrepute.”
“We have another group of members who are against that and feel that it would dilute our focus on professional advice and that we should not have anything to do with them.”
The question of how to ensure that the new class can eventually become a full member of the advice profession becomes increasingly important in the face of what FAAA chair David Sharpe called an “existential threat” to financial advice – dwindling adviser numbers.
“We need to make it easy and become that trusted profession where we’re allowed to get on and do what we do. But if we have the headlights on our bike just looking down at the rocky path we’re currently riding on, we might miss the cliff that’s coming,” Sharpe said.
“The declining numbers of our profession, if I could be blunt, it’s an existential threat to financial planning.”
He added that the FAAA making a decision around including the new class of adviser is looking at it as a “long-term issue”.
“We know it may not be affecting our members right now, but if you’ve got a business and you need staff in two or three years’ time, it’s absolutely going to be impacting you,” Sharpe said.
However, Abood also noted that the concerns around a possible dilution of the financial advice profession are valid, particularly given the changes over recent years to ensure it is indeed viewed as a profession.
“What distinguishes a professional from someone who’s been successful in their career or is doing something else is their obligation to put the interests of the client first,” she said.
“That will also set us apart, by the way, from a new class of adviser. One of the most common pieces of feedback I’m getting from members at the moment is that the new class of adviser probably shouldn’t be called adviser, or at least if they are, under very limited circumstances, because that term is protected and because those who hold it at present have that fiduciary duty to their clients.
“We want that protected, and we want that made distinct from what the new class of adviser will be able to offer. They will not personally have a duty to their client. It’s their employer [that] will have a duty to their client. That’s why I would argue that they’re not a member of the profession per se.”
The big issue with FAAA is they advocate for the interests of both consumers and advisers.
This puts them in a very conflicted position with policies like this.
The future of advice in Australia is an offshore call centre.
Or maybe it’s an onshore call centre filled with FAAA imports from overseas.
We all know FAAA just sees extra $$$ whatever they are called which should exclude the name Adviser and be more appropriate for the intended role such as “Product Information Employee” or PIE for short….
I thought the FAAA was about memners who provide Personal Advice
This sounds suspiciously like a member ship grab
You know it…
Well, they also represent Consumers leaving the FAAA plenty of reasons why they would support the “Qualified Adviser” concept – all paid for by the Product Manufacturers. Remind me again – what is “Conflicted Advise”?
They need to be called “unqualified advisers” before we even begin to countenance this conversation, because that’s precisely what they are, the term qualified adviser is highly misleading. The next best option is for whatever these people are, is to not to have the term adviser in their job title at all.
The word adviser shouldn’t be included at all.
Focus on getting rid of the HOT MESS for Real Advisers first, nothing of substance done yet.
Focus on cutting 70% of the BS mad over compliance red tape and many more Australians can get Real Advice.
It’s clear Canberra, ALP for Industry Super & LNP for Banks and Life CO’s are hell bent on the new BackPackers.
They should be called Product Sales Agents.
The “existential threat” to financial advice is bad regulation, not dwindling adviser numbers. Fix the bad regulation problems first and adviser numbers should start to turn around.
At the moment FAAA is wasting limited resources trying to sell more tickets to future voyages of the Titanic. Focus on the iceberg FAAA.
Great comment
New class of adviser and how they fit in seems to be getting messier every time I read one of these types of articles.
It has been messy from the start. It’s all about allowing product companies to sell more product under the guise of “advice”. It has nothing to do with making professional advice more affordable, or creating a pathway for new advisers. Those are just attempted rationalisations. It’s purely and simply about the commercial interests of product companies. Nothing else.
Jones seems to have backed away from the ludicrous “Unqualified advisers” name and is now using “New class of adviser”. But they aren’t a new class of adviser at all. They are an old class of salespeople.
Yep, Product Sales Agents
With a 4 hr train on course.
[Hard-working Aussie] – “Hello [insert industry super fund], I’d like some personal advice about my super. Can you please help me understand why [insert industry super fund] has the same product as my current product with better 10-year performance? Should I think about taking my money there?”
[Industry super fund] – “Past performance is not a reliable indicator of future performance.”
[Hard-working Aussie] – “But it has outperformed by 1% pa over the least 10 years. How much would my fees be at the other industry super fund?”
[Industry super fund] – **crickets** **phone disconnects**
The FAAA sees it future aligned with AwareSuper and the likes. There’s a lot of members there, support staff, call centre staff, managers, and admin people, all with AwareSuper paying members fees. That’s the future of the FAAA.
The other class of member is an Adviser with 40 clients charging $20,000 that they see 1-2 times a year.
The sensible idea of making advice more affordable and allowing those Advisers with 100 clients to be able to see 150-200 clients and doubling the number of Australians working with Advisers is obviously no longer on the agenda.
Call these people a “fund Officer” if they are desk bound jockies providing factual inforamation on the product itself. Why call them advisors.
They are factually providing information, not advice. otherwise the will encroach on advice by default.
I believe they will be providing advice?
NO the FAAA should not support the new class of adviser, unless there are significant changes, first and foremost the name which is enormously misleading and deceptive.