‘Behold! I’ve brought you an adviser!’

There’s a brief story relayed in Diogenes Laërtius’ work, Lives and Opinions of Eminent Philosophers, that concerns Plato and Diogenes of Sinope, also known as Diogenes the Cynic. There are some differing versions, however at some point in the 4th century BC, Plato jokingly defined man as a “featherless biped”. Diogenes, having little respect for the abstract nature of Plato’s philosophy, plucked a chicken, took it to Plato’s Academy, and remarked: “Behold! I’ve brought you a man!”

The incident highlights an interesting clash of language and meaning, where categorisation is imprecise in an attempt to be clever and instead introduces confusion.

The financial advice profession found itself with its own plucked chicken on Thursday morning when Financial Services Minister Stephen Jones announced a new class of advisers would be added to the fray – the “qualified adviser”.

Many within the industry found this an odd label, given that the fight over advice qualifications has been a long and messy one, finally reaching some measure of conclusion following the royal commission, the Financial Adviser Standards and Ethics Authority (FASEA) exam, and a concerted effort at professionalisation (some would argue the experience pathway has stood in the way of these efforts).

In his speech on Thursday, Mr Jones explained: “Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters.

“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.”

He added that, in terms of fees, “qualified advisers will be prohibited from charging a fee and from receiving a commission”, which he noted, would help “restrict their advice to simple advice”.

This would be a good time for Australian consumers to remember: if you are receiving a service and not paying for it, then you might be the product.

Plucking the chicken

The details of what qualifications/advice these qualified advisers will hold/provide are not exactly clear, but the minister did relay the broad strokes.

A qualified adviser will focus on simple advice, and they will be required to meet a government-mandated education standard.

“The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance to be less onerous than the requirements for professional advisers,” he added.

An important note in that last quote from Mr Jones is the reference to “professional advisers”. Indeed, that’s the designation that those currently operating as relevant providers will be known as to the public.

If nothing else, at least the government has taken a concrete stance that the current cohort of degree-qualified advisers do constitute a profession.

Where things become murkier are in relation to the Corporations Act, specifically s293C. When Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 passed through Parliament, it added a restriction on use of the terms “financial adviser” and “financial planner”.

In the context of the new “qualified adviser” class, with limited scope, institutional employees would not be relevant providers. While the use of “qualified adviser” may not be specific enough to actually breach the law, it does represent a dilution of a restricted term.

Featherless biped, indeed.

Perhaps Minister Jones will follow in Plato’s footsteps as consultation rolls on and add something akin to the “with broad, flat nails” addendum the philosopher tacked onto his definition of man.