During a Senate Economics Legislation Committee hearing last week, Senator Leyonhjelm questioned whether the degree portion of the proposed new education standards were necessary, saying it does not guarantee better quality advice.
“Are [the reforms] responding to the market? Are customers saying ‘I would have greater faith in that [adviser] if they have a degree’?” he asked.
“I couldn’t find any correlation between poor advice and the absence of a degree. And the presence of a degree doesn’t fill me with any confidence. I’ve got three degrees and I guarantee I could not give any good advice.”
Senator Leyonhjelm added that he was concerned about the potential for the cost of advice to skyrocket as a result of the degree requirement.
“[If] the capability to give to good advice is not dependent on a degree but you nonetheless require everybody who gives financial advice professionally to have a degree, you’re reducing the pool. Therefore supply will be reduced and the cost will go up for consumers,” he said.
“That’s the concern I have. Ultimately we’re worrying about the quality of advice and raising the bar to improve the quality of advice without regard for whether that advice will actually be affordable.”
Responding to Senator Leyonhjelm, ASIC deputy chair Peter Kell said that while he agrees a single degree will not make a difference, it is part of a package of reforms that is expected to lift professionalism throughout the industry.
“I don’t think anyone [is] suggesting that a degree alone is the magic answer to better standards and better outcomes in this space. There’s a package of reforms that we believe will lift standards in this area… The degree is one of those,” he said.
“But on that issue of a degree, the FPA would argue that its more qualified members are less likely to be the subject of ASIC regulatory action. Furthermore, our surveys show that clients have difficulty assessing the quality of the advice and therefore having those objective markers certainly helps.”
Mr Kell also argued that because the new standards would only apply to personal financial advisers, the affordability of advice is not likely to be an issue.
“We’re not talking about applying this standard to all advice… This is for personal advice at a higher level typically around more complex products. I think there is an argument that says that ought to require a higher [education] level,” he said.
“The issue of accessibility and affordability is also one that we are strongly concerned about and that’s why we actively engage with the financial advice sector on how they can provide, in a cost efficient manner, so-called scaled advice.”
Having a degree makes us better advisers?
Is that like Kelly O’Dwyer having a degree makes her a better politician?
Hmm
[quote name=”Dave”][quote name=”Ben”][quote name=”Reality”][/quote]
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Dave, Ben and Reality are all correct. I especially agree with Dave their are various avenues to get a degree and some of them can be as short as 36 weeks, so to all the people who are resisting getting a degree, Dave is right we will have the edge over you & steal your clients and eventually you will be forced out of the industry by legislative changes and then we can buy your clients up cheap, you only have yourselves to blame for that you knew about these changes for a very long time.
[quote name=”Your kidding right?, NO I AM NOT”][/quote]
If studying whilst having a family and a full time job is so hard then how do all those mature age students who have families and full time jobs study MBA’s or CFA’s, because they put in the effort so to say you cant do a bachelors degree(which is much easier) when you have a family and a full time job is not true at all.
No I am not kidding majority of uni students are working part time some even full time like i did, whilst they are studying so to say they have no commitments clearly shows you have no idea. And to Steve’s comment a bachelors degree will only take 6 years to complete part time not 10 years don’t know where you are getting your figures from. Im also talking about people in the financial services industry not farmers.
Agree with everything you have said John Edwards, but What’s the downside of requiring degrees?
Dave, you have hit the nail on the head. Writing has been on the wall for some time and hence I started my Masters couple years ago and am just about to finish!
It’s not hard. Lets all stop complaining and get this industry the respect it deserves.
[quote name=”MRT”]And as for the argument about unaffordable advice, well a nurse needs a degree but that doesn’t seem to push up the cost of nurses?[/quote]
Most nurses work in the public sector so wages are controlled.
Oh, I see what the pollies are up too with our industry.
Arguing that degrees are the solution is way too simplistic. For a start, how good are the degrees themselves ? We have employed graduates with extremely poor understanding of the financial planning fundamentals so what did the degree teach them ? We also have graduates with poor commitment levels and are reluctant to role up their sleaves and do a variety of roles. Sense of entitlement is rife and arguing that degrees is the point of difference will only make that worse. Please note I have a degree in finance so no conflict of interest.To be successful an adviser needs a long term commitment to their own professional development ( not just a certicate on a wall ) and they need to develop soft skills not taught in degrees and above all care for their clients.
As a CFP qualified planner (with no degree), I can get my Masters Degree by completing just 6 subjects. These will cost only $1,000ea after tax. These can be completed at my leisure.
That means for $6,000 and approx 36 weeks of my life at anytime that suits me over the coming 2-5 years will see me with a Masters Degree.
I’ll probably spend more time than that on this website site and spend more than that on beer over that time frame!
It is NOT a big ask, and those who are against it, so was I, but then I objectively considered the options and changed my mind. If you do to, great. If you don’t, no worries, I look forward to stealing your clients or buying your book cheap when you are eventually forced out of the industry by either legislation or market forces.
Opinions to the contrary are a wasted of effort. This will happen, it’s a matter of time. Don’t be bitter, be pro-active!
There is no point debating this. The Government, ASIC and our vocal critics all want degrees. Let’s put forward positive suggestions. For example, existing advisers with no degree should be able to complete GradDip’s, with entry assured for those with experience and some subjects waived based on DipFS/FP. Provide 5 years to complete and it will be achievable for all. No more difficult than the compliance, SOA’s and research we already do every day. If ASIC could lighten the load by making SOA’s more simple and streamlined (eg. 2 page SOAs, which cut to the chase) and temporarily scrap CPD for those studying, then I’m sure we can all sail through this, with lasting benefits for our clients and our whole profession.
We require degree qualifications for most professions, it seems strange that Financial Planners seem to think that they don’t need a degree. And as for the argument about unaffordable advice, well a nurse needs a degree but that doesn’t seem to push up the cost of nurses?
All you people who don’t see a problem with getting a degree need a degree in empathy ir do a course on caring.
How dare anyone inflict that burden on someone who hasn’t done a thing wrong. It’s an invasion of time and money for me. I don’t need a degree and I certainly don’t want to spend the 10 years studying part time while denying my kids the rare spare time I have. What don’t you Dudley do rights get about this fact?? It’s not needed. Remember this, EVERY SINGLE ROGUE ADVISER was qualified, met the FPA standards and many had degrees. We don’t need degrees. What we need is to reduce cost to the industry, have quality insurers and most importantly EXPERIENCED real world compliance people, not Vox tickers. Lastly SOA’s should be deleted from existence and a new method of delivery introduced. How about videoing every recommendation at the final interview that everyone can replay to remind eachother of the strategy. Tech allows this to be done easily today. What a joke this industry is today! Absolute joke. A circus full of clowns running around scarring the customers and the tent too expensive for most to enter. Disgraceful!
I am not a financial adviser but a degree doesn’t mean much to me. As long as the person has a passion and can do the job with training and can show they are competent with passion for the business. There’s plenty of crooks with degrees who arte incompetent. A degree only proves you can pass an exam and obtain a certificate not that you can do your job any better. On the job training is better
Started the Masters just as the cracks of the GFC started. Difficult period studying financial planning when everything you’ve recommended comes into question. On another note, I do recall reading subject material claiming CDO’s were a good low risk investment for portfolios. I kid you not. Clearly written before the GFC started. Yet, amazingly us advisers were supposed to have known their whereabouts and the risks…right ASIC and FOS?
While you are all reading and writing comments on here over the next month about this, I’ll be completing a subject toward my Masters Degree and then will only have 5 to go. Then I’ll do another, and another, and another and before I know it I’ll be done and you’ll be scrambling to figure out where to start…
I’m CFP for 10+ years, plus SSA and more, but no ‘degree’. I don’t need one or want one, but I’d rather spend my time and energy doing it rather than whining about the possibility of having to.
Required or not this time around, sooner or later it will be and when that day comes, I’ll be sitting pretty.
P.S. For anyone CFP, you will get exemptions and there’s only 6 subjects to complete, at your own pace. I expect to start and finish within 18 months, doing just 1 subject at my own pace at a time. And I run a business, have a young family, etc, etc.
There’s never a great time to do something more, just suck it up and do it.
I think everybody should stop whinging about getting a degree and just get on with it and do it, I mean seriously theres thousands of 18/19 year olds who are doing it so why cant we……pfft now I have read it all. Really…seriously thousands of 18 and 19 yr olds are doing it. Yes…they also have little to no commitments….highly unlikely to be working full time…..highly unlikely to be raising a family….and the list goes on. What a muppet of a response from someone who clearly has NFI. For the record, I do have a degree, I did it as a mature aged student and took off 2 yrs to do it. Could I do it now with children, working full time and long hours, running a farm, I would definitely struggle. So to palm it off as a whinge and simple to do is the thinking of someone with no idea.
Mr Kell is obviously complicit in letting various organisations get away with providing personal advice while pretending it is “general advice”. He should explain what he means with the statements he has made.
I think everybody should stop whinging about getting a degree and just get on with it and do it, I mean seriously theres thousands of 18/19 year olds who are doing it so why cant we, not wanting to do a degree is merely a reflection on yourself that you dont want to increase your knowledge and learning(im guessing these are the same advisers who are grandfathering all their fees and not switching their clients into new products for fear of of losing those easy commisions) These new laws are about lifting the professional standards of the industry as a whole so that the Financial Planning industry can be as professional as the Chartered Accountant industry.
Lucky the good Senator sees sense in that holding a ‘degree’ with a passing relevance to financial planning (e.g. law, MBA, accounting, economics. etc.)doesn’t make someone a financial adviser.
Noted on his CV that when he wanted to be a veterinary practitioner he went and earned a veterinary science degree.
Shouldn’t this be the same for us? If you want to be a financial planning practitioner, hold a degree in financial planning.
See the distinction being that holding just any degree with some relevance to financial planning (e.g. law, MBA, etc.), isn’t the same as a full degree in financial planning.
Forcing people to take on a ‘degree’ just doesn’t make sense. Whilst asking them to upgrade to a degree level in financial planning does make professional sense.
Should be able to enter or remain in the industry with any viable degree like law, engineering, education, commerce etc. Fill in any knowledge gaps with the relevant ADFP subjects. Rather see breadth of knowledge and experience than a bunch of lemmings.
“No winners” my comment was tongue in cheek, the point being that what is supposedly good for the goose is not necessary for the gander. Separately I have already done the hard yards and hold a B.Com from UNSW and an MBA from Sydney Uni along with required industry qualifications. University is not really vocational training, that is what the RG146 requirements are for. University is like training it is not actually the game but it prepares you for the game.
[quote name=”Patrick McMenamin”]I have just reread the statement by Senator Leyonhjelm: “I’ve got three degrees and I guarantee I could not give any good advice.” May I ask then: “What the hell are you doing running the country Senator?” How about mandatory degrees in a relevant field for all aspiring politicians? To quote the late great EG Whitlam “It’s Time”.[/quote]
Given the context it makes sense to assume that he means he would not make a good financial adviser despite his multiple degrees, and that they are therefore no guarantee of good advice.
Maybe you could fit some extra study into your life and head back to uni for an arts degree. Sure they’re commonly seen as useless, but a major in philosophy or English would give you the opportunity to improve reading comprehension and the skills to build a better argument.
I’ll go and study some psychology, you’ll be off to your philosophy classes and the senator can go and enrol in.. Oh, he has a law degree and an MBA. What do you want him to come and study with us Pat? They seem relevant.
I have just reread the statement by Senator Leyonhjelm: “I’ve got three degrees and I guarantee I could not give any good advice.” May I ask then: “What the hell are you doing running the country Senator?” How about mandatory degrees in a relevant field for all aspiring politicians? To quote the late great EG Whitlam “It’s Time”.
The above commentary, if correct, simply shows where ASIC sits on the provision of financial advice. They are not concerned about the provision of financial advice to the general public as this can be done through an industry super fund or online (ie) general advice. I personally agree with the educational requirements but the key issue facing this industry is the complete ignorance of the regulators and those that oversee the regulators about the real world. Comments like this only reinforce my opinion that the LIF changes on SOA’s and processes which are “promised” as part of the reduction in commission payments are a complete joke.
Scaled advice with a catch all poison pill for personal advisers. Working well so far.
Thank goodness for one pragmatic politician on the cross benches in Senator Leyonhjelm!
Kell, you’re not being truthful are you. Increases in educational requirements will affect all advice, not just around more complex products.
Senator Leyonhjelm, thank you for your comments. It’s nice that a politician finally acknowledged what many of us are concerned about: cost to serve clients, and that absence or presence of higher education is no guarantee and is in fact going to provide a false sense of security. Peter Kell as per usual had displayed his disassociation from the service he regulates. He is saying that this will only apply to ‘complex advice’ because we all provide the rest of our advice as ‘general in nature’, right Peter? So super roll-overs and insurance replacement aren’t personal advice? Bugger me, so I could’ve just told my working class nurse last week what to do, told her it was general in nature not personalised to her circumstances, winked at her and not bothered with the SoA? Well that would’ve been much cheaper. I could’ve just billed her an hourly rate. That way she wouldn’t be affected by the increasing costs that apparently only the wealthy should be paying as no one else needs personalised advice. Disclaimer:I have a degree, I’m not bitter about the standards, I just wish those that made decisions had any idea what their impacts are.
Thank you Senator Leyonhjelm for bringing some logic into this issue, yes it is vital for all Advisers to be well educated, yes it is vital for all to have very good ethics and morale’s but as you have so rightly said a degree does not automatically create these attributes.
The compliance burden already onerous has only increased with FOFA, this is what is making advice expensive. What is required is a full and frank disclosure by ASIC as to how much investor money lost due to “bad” advice has been recovered and returned to clients by ASIC action? Further lifting the bar to make all advisers appropriately qualified and professional has a self regulatory effect. True professionals typically do act in the interests of clients (to wit lawyers, accountants, doctors, dentists), product flogging boofheads typically do not.
education standards are not negotiable, the sooner it aligns with other profession and mandates bachelor degrees. the advise business will never be on equal footing. Just raise the it degree level and move on