‘Qualified adviser’ education framework must lead to more holistic advisers

When announcing the final tranche of changes in the Delivering Better Financial Outcomes reforms in Canberra in December, Financial Services Minister Stephen Jones first unveiled the new class of financial advisers that will “fill the advice gap by advising on less complex matters”.

The specific details were, and indeed still are, unclear. Where this is particularly evident is the level of qualifications that these “qualified advisers” will need to attain.

“On qualifications, as the name suggests, they will be required to meet a government-mandated education standard,” Jones said at the time.

“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 that this system will enable institutions to “invest in these individuals, in their training and competency to meet the scale that Australians desperately need”.

According to Ben Marshan, founder of Ben Marshan Consulting, until the parameters of the advice being provided are understood, figuring out the education framework is incredibly difficult.

“Until you’ve got that level of detail, it’s almost impossible to figure out what the right level of education is,” Marshan told ifa.

What he did point to, however, is that it’s important to remember that the institution employing a “qualified adviser” will be the one providing the advice, not the adviser.

“The licensee, be at a super fund, be it a life insurer, be it an investment provider, or bank, if we get to that that level as well, are actually going to be providing the advice,” Marshan said.

“These are just individuals who will be part of that delivery process, but the advice has actually been provided by the licensee.”

Effectively, Marshan explained, the advice is going to fall between specific guardrails and the provider simply needs to know when a client needs to be bumped to a holistic financial adviser.

“How much education do you necessarily need to fall within a very tight and controlled script or a very tight and controlled advice process?” he added.

“Your people skills and your ability to assess whether or not you’re inside or outside those guardrails become the more important part of what you’re doing, not necessarily your level of expertise or knowledge.”

However, given that the government appears as though it will be going ahead with introducing the new class of advisers, Marshan said it would be “an absolute tragedy if the framework didn’t effectively create a funnel for people to become holistic professional financial planners”.

“The reality is there are core bits of knowledge around what financial services are and what the different parts are, which are valuable to know. We’ve moved so far on the professionalism and ethics front that it would be a disaster if we didn’t have that kind of education within whatever the requirements are,” he said.

“There needs to be a really good level of education around the specific topics that you’re providing services in, but do you actually need everything outside of that?

“That’s where I think you could have a different kind of framework for qualified advisers than what you do with holistic financial planners under FASEA.”

While Marshan stressed that making any predictions or recommendations about education levels at this time could be a fool’s errand, he did note that his preference would be that the new class of advisers hit the AQF 7+ level.

“My personal preference would be to see a way that they will probably hit that AQF 7–8 level so that there was a pathway to move them to be holistic if they wanted to over time, but you don’t necessarily have to do everything,” he said.

“Two to four subjects depending on your specialisation, one in financial services, one in professionalism, one or two in the specific knowledge areas you need, seems about right.”

Speaking at the SMSF Association national conference in Brisbane last month, Bryan Ashenden, head of financial literacy and advocacy at BT, said wherever the government ends up setting the education requirements, it is important that they are a “stepping stone” to meeting the full education requirements of a relevant provider.

“From a financial advice perspective, if we know that is what it is going to be, it is important that whatever that requirement becomes, it is actually something that can work as a stepping stone for that particular individual that if they want to progress in their career or become a fully-fledged financial adviser, a relevant provider down the track, that they get some form of credit for having done that education,” Ashenden said.