Jones to consider alternatives to ‘qualified adviser’ during next phase of consultation

Late last year, the Financial Services Minister, Stephen Jones, announced that not only does the government want to see superannuation funds expand their advisory powers, but it also supports the creation of a new class of financial advisers – “qualified advisers”.

“Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters,” Mr Jones said.

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

Predictably, the financial advice profession was outraged by the government’s choice of term, particularly given that the fight over advice qualifications has been a long and messy one.

ifa earlier learnt that the minister would reconsider the term over the coming months.

This has now been confirmed by the chief executive officer of the Financial Advice Association Australia (FAAA), Sarah Abood.

Speaking at an event held by PritchittBland Communications on Wednesday, Ms Abood said that, according to the minister’s reassurance, the word “qualified” was intended in the sense of caveated or restricted. However, having taken into account the dissatisfaction among advisers, the minister has assured the FAAA that he is welcoming suggestions regarding a more appropriate term.

“The minister has let us know that the term is not set in stone and alternatives will be considered during the next phase of consultation,” Ms Abood shared.

The FAAA is currently polling its member body to gauge their thoughts on the best appropriate term.

Ms Abood also spoke about the need to ensure employees of institutions have an appropriate level of education – another area of the government’s response that is set to undergo further scrutiny.

“We think it’s important that minimal levels be legislated and that those levels be set commensurate with the type of advice that qualified advisers are going to provide. This is critically important to ensure that these people can give clients advice that is genuinely in their best interest,” the CEO explained.

She noted that minimal levels of education are also an “important insurance” for employers of these advice providers.

“It’s the employer that will have the duty to ensure that that advice is not just good advice, because we know that good advice is gone, but that it’s the best interest of the client that will be the test and that’s a high bar,” Ms Abood said.

“We are also suggesting that the education requirement should fit into the current financial advice ecosystem of education that already exists.”

The latter would create a pathway for these qualified advisers to one day become fully-fledged financial advisers, Ms Abood said.

“This would also mean that qualified advisers could play a substantial and positive role in rebuilding the profession and the numbers of professional financial advisers.”

She emphasised the importance of ensuring there are safeguards to ensure that the new legislation doesn’t reverse the years of hard work that have gone into the professionalisation of advice. This would also include appropriately defining “simple”, Ms Abood said, to evade issues that were had with general advice.

“We’ve said they can provide simple advice, what do we mean by simple?”

Ultimately, Ms Abood said, the key is to safeguard the profession alongside the consumers of advice.

“What a tragedy it would be if we turned the clock back to a pre-royal commission time when the RG146 requirements technically could be achieved in a weekend.

“We all saw what happened then, and I don’t think any of us want to go back.”