The mandatory education racket

Usually the festive season provides the opportunity for a less heated and more reflective news cycle, as business owners relish time with family and read more analytical pieces such as ifa’s annual Year in Review feature.

But with livelihoods under threat and uncertainty remaining high relating to the imposition of mandatory ‘professional standards’, many advisers have not been able to completely put the stress out of mind this summer, unsure of what the future may hold.

FASEA, the taxpayer-funded bureau for adviser oversight, issued its much-anticipated ‘guidance’ for existing advisers in late 2017, but for many readers, the edict posed more questions than answers.

We still await clarity over which specific courses and education providers will be approved by this omnipotent and wise organisation.

Indeed, the anxiety levels are so feverish currently that as much as 75 per cent of responses to our most recent straw poll indicated they will seek early retirement. The poll saw more than 3,500 voters and is therefore a fairly reliable snapshot of current sentiment.

With such negative sentiment rife in the industry, and many practitioners wondering whether the important work they do helping clients achieve financial freedom is even worth continuing in the face of ever-growing and questionable state intervention, if only there was some kind of organisation or body whose job it was to advocate on behalf of advice providers and try to help ease their pain.

Well until fairly recently such organisations did exist. The FPA and AFA are examples of industry bodies with proud histories of advocating for their members and trying to influence the word around us to make life better for their members.

They have since pivoted and taken on the seemingly noble cause of advocating for the “public interest” instead.

To the trained eye, however, this has simply meant a self-interested strategy to attain that holy grail of return without risk – a captive audience of mandatory membership and ongoing revenue model of continuing professional development.

Once upon a time it was the role of the associations to advocate on behalf of their members to government. It is now their role to advocate government policy to members.

While on a human level there is no doubt the associations and their staff are well-meaning. They do feel the angst of their members and genuinely want them to succeed, but they are paying the price for their leaders trusting politicians and dancing to their crooked tune.

This publication has never shied away from pointing out conflicts of interest in the industry, whether through vertically integrated business models or other incentives that continue to cause harm.

But this whole business of mandated education is arguably worse, a nasty network of cronyism and patronage and sycophancy under the guide of ethics and education and the 'common good'.

The associations are paid by advisers to produce white papers and press releases and submissions welcoming mandatory education as an important step on the ‘road to professionalism’, cheered on by product providers looking to jump on any positive PR bandwagon and our more obsequious colleagues in the financial press.

They then remunerate themselves in large part by selling ongoing CPD and education courses for a fee.

That is just as conflicted as any commission, inducement or incentive listed in the Corporations Act.

Advisers are of course aware of all this, or at least those that read ifa or are adept at critical thinking. But many have let it slide in the hopes that at least the courses they have been paying for would allow them to keep plying their trade. That’s why so many CFP holders are aghast that their designation may not be enough to meet FASEA’s standards.

It would be humorous if it wasn’t so damn distressing.

The FPA (which has a monopoly on the CFP designation in Australia) obviously hasn’t been greasing enough palms at FASEA, despite its close personal ties to its CEO Deen Sanders (a former FPA employee) and board members Matthew Rowe (a former FPA chair) and Mark Brimble (chair of its Financial Planning Education Council subsidiary).

Or perhaps it was more deliberate. After all, as an FPA member reminded us last week, it was the FPA itself that “gifted” the FPEC syllabus to its friends at FASEA. Perhaps there are a few new bells and whistles to be added to its menu of educational courses. Watch this space.

The tertiary education providers also maintain conflicted ties to the very body tasked with deciding which providers will gain the lucrative government green tick.

Many FASEA board members continue to receive employment payments or have other ties to the commercial providers of potentially compliant courses, as Certified Financial Planner William Johns has had the guts to point out.

If the ifa straw poll is anything to go by, they have all been guilty of ignoring the adage not to ‘bite the hand that feeds you’.

Soon enough the associations and university financial planning departments may not have many members or students left, leaving Australians with fewer advice options than ever before.

But it’s all in the “public interest”, of course.

Aleks Vickovich is managing editor of ifa. He was named Columnist of the Year at the Mumbrella Publish Awards 2017