Adam Steen, a professor of finance at Charles Sturt University, told ifa he believes a one-off exam on top of the other proposed requirements will only place an extra burden on advisers, and it does not seem necessary.
“You can have certain people who can pass lots of exams but are they necessarily going to be anymore ethical? That’s the question. The evidence from overseas is quite mixed but that kind of exam doesn’t do much,” Mr Steen said.
“It raises a lot of money if everyone has to pay for it. It creates a whole new body and provides employment for a few people who are administering the exam.
“But I don’t know what it’s going to achieve because you end up creating an additional burden on people. It’s going to cost a hell of a lot of money since you’re basically setting up another instrument and another body. I’m thinking less is more,” he said.
While Mr Steen does not back the exam proposal in the government’s draft bill on new adviser standards, he is supportive of having advisers top up their education.
If the draft bill is legislated as is – forcing all advisers to become degree-qualified – advisers should make the most of the situation by gaining a degree in a specialised field.
For instance, demand is growing for financial advisers who have up-to-date training in estate planning – an ideal study option for advisers heading back to school, he said.
“What’s happened is that a lot of people might have done estate planning courses 10 years ago but things have changed and so have a lot of the requirements in estate planning,” Mr Steen said.
“We’re trying to cater for all levels of entry into our courses by not only giving people the ‘tick off’ but also providing something that they don’t have.”
He added that there seems to be a misunderstanding about the degree path, in that many experienced advisers believe this entails completing a four-year program and re-learning much of what they already know.
However, Mr Steen said there are ways for seasoned professionals to instead enrol into postgraduate programs using their years of experience and other qualifications.
“If you’re a planner or an adviser, and you’ve been in business for a number of years, and say you’ve got an advanced diploma that you did a number of years ago, you don’t need necessarily to go into an undergraduate degree,” he said.
“For people like that, who are older and experienced people [who have] got some former qualifications, we are allowed under government regulations to take them into a postgraduate course.
“Then, if you complete the subjects and get credits for your previous studies, that’s a lot shorter, a lot quicker and less expensive [than a four-year degree] and you’ll enjoy the experience more because you’re with your peers,” Mr Steen said.
Another education provider, from a Deakin Prime subsidiary, recently told ifa he doubts whether the exam will solve the industry’s professional issues.
[quote name=”Dave”]Reality
we agree there is a problem at all levels- the one issue that has not been addressed throughout this whole mess is the role of the licencees who allow by negligence or lack of controls, this type of advice. the source and control of advice has a lot to answer for within some businesses and as a result the whole industry is being turned inside out for the lack of REAL action.[/quote]
Yes very true, Dave. Unfortunately these days with the adviser being 100% responsible the dealer groups get away with murder…
I agree that advisers should be responsible for advice but I also feel dealer groups should be held just as accountable if they consider it ‘appropriate’ in their annual ‘audit’ aka covering of the tracks.
Dave you may have missed bit. My comment was that the very small businesses are time dated IF they are not part of a well structured quality licensee, so I stand by my comment. And this may be consistent with what you have said i.e. the negligence or incompetence of some licensees.
As with Reality some of the worst advice and worst business management I have seen has come from theses small practices. Sometimes its been because the adviser in sub par in the advice area or all too often they are too busy to keep on top of all the business operational issues. In the latter case I’ve seen some advisers who have excellent knowledge and provide excellent advice suffer. An advice practice is not purely about their advice knowledge its also about its total business acumen.
I agree with you that the industry needs real action not just the traditional talk.
Reality
we agree there is a problem at all levels- the one issue that has not been addressed throughout this whole mess is the role of the licencees who allow by negligence or lack of controls, this type of advice. the source and control of advice has a lot to answer for within some businesses and as a result the whole industry is being turned inside out for the lack of REAL action.
[quote name=”Dave”]RT. wrong buddy. The notion of small practices being dated and sub standard is absurd. These problems that are testing the profession emanated from where….large dealer practices with large staff. Those of us with 1,2 or 3 staff are well and truely on top of our game and well qualified. I have no issue with education requirements but without any substance from an authority to offer objective facts regarding what is to come into force and what prior study is considered, we are all just blowing wind. The essence of change should be directed to new entrants and those with limited formal credentials. Have a look at the T P B requirements….8 years experience, get signed off and you are there, no exam. Howzat[/quote]
I disagree sorry, Dave. Two of the worst advisers I know run their own practices with 2-3 staff each. They are both CFP (but only have a DFP).
They have made plenty from simply buying books of clients in the past and moving them across to their preferred platform and charging large asset based fees only to not be spoke to again and churning insurance. Due to opt in not being grandfathered they are laughing.
I know the advice is horrible as my firm has met with their clients pretty regularly to provide them actual financial planning. The clients are always bewildered as to how different our advice is and why it wasn’t recommended in the first place.
RT. wrong buddy. The notion of small practices being dated and sub standard is absurd. These problems that are testing the profession emanated from where….large dealer practices with large staff. Those of us with 1,2 or 3 staff are well and truely on top of our game and well qualified. I have no issue with education requirements but without any substance from an authority to offer objective facts regarding what is to come into force and what prior study is considered, we are all just blowing wind. The essence of change should be directed to new entrants and those with limited formal credentials. Have a look at the T P B requirements….8 years experience, get signed off and you are there, no exam. Howzat
Um, I did the CFP the new way – the hard way – I did more than a one off examination. A can’t recall how many examinations I did. It was a lot of work.
The advice industry will continue to become more challenging in terms of the knowledge an adviser must master and we must have something that tests that any one adviser has the up to date required knowledge – even if that knowledge is to know when to refer to a true specialist.
For an essential industry that is still struggling for internal and external consistency and professionalism one-of exams, as painful as they will be for some, will be an important brick in the wall.
We need to start to accept that the days of the adviser who is completely on top of all subjects is time dated. The days of the one or two person practices, running on the smell of an oily rag and not part of a very well structured, deeply resourced licensee are also limited. ( Financial services is a human resource intense one. ) There is nothing wrong with this, its part of the industry becoming a true profession.
Some “common” sense finally completely agree with the above
The exam would be frustrating but then again I know plenty of advisers that would seriously struggle with the most basic of closed book exams…
If it is implemented there needs to be structures to assure the dinosaurs can’t just somehow get their admin staff to do it like CPD.