Should advice firms employ ‘qualified advisers’?

While the government plans to set up a two-tiered advice system – allowing employees of superannuation funds, insurers, and banks to be recognised as “qualified advisers” authorised to offer financial advice – Keith Cullen, the managing director of WT Financial, believes advice firms should also be offered the opportunity to hire these advice providers.

In the legal profession, he noted, firms have a hierarchy comprising paralegals, junior solicitors, solicitors, and barristers. Conversely, the demanding qualifications for financial advisers result in a staffing structure predominantly composed of professionals equivalent to KCs, the highest rank in the legal field.

“The higher education standards mean there is only one type of adviser now, everyone is a KC now, and not everyone needs that level of advice. You wouldn’t ask a KC for legal advice on buying your first house, for example.

“We’d like to see practice principals who can hire these simple advisers; they shouldn’t only be for super funds. At financial planning firms, they could be used for simpler transactions which don’t require a full statement of advice, who only want simple advice.

“Simple advisers should be able to charge a modest fee and operate at an advice firm. We need to keep working with the government to swing the pendulum back.”

Commenting on Cullen’s proposal, Eugene Ardino, chief executive officer of Lifespan Financial Planning, said “it’s an interesting idea”.

“I think any suggestion that frees up actually qualified advisers to spend more time with clients and solving more difficult scenarios for clients should be considered. For it to work we would need to define what they could and could not do – a similar framework we need for what’s currently been proposed in my view,” Ardino told ifa.

He also stressed the need to find a “better name” for these advice providers.

Earlier this week, ifa reported that similar to the sentiments expressed by the majority of the financial advice community, Allens, where Michelle Levy holds a partnership, finds it “curious” and “potentially confusing” that the government would choose to label the new class of advisers as qualified advisers, especially considering they will be held to a lower standard of education.

As discussions continue in the ongoing Treasury roundtables in Canberra, the industry is particularly interested in learning what term the government will choose for describing advice providers not deemed relevant and employed by major institutions.

In December, Financial Services Minister Stephen Jones announced that these providers would be referred to as qualified advisers, with the title requiring only a diploma. Unsurprisingly, financial advisers were outraged considering the painstaking effort they had undergone to attain their professional recognition.

While the QAR reviewer, Levy, didn’t publicly declare her thoughts on the minister’s final response to her findings, her law firm, Allens, did at the time release a statement dissecting every detail.

Last month at Senate estimates, Treasury officials found themselves at a loss when faced with inquiries from Liberal senator Andrew Bragg about the origin of the term qualified adviser.

Taking the lead in responding to the question, Andre Moore, assistant secretary of the advice and investment branch, stated that the term was a “decision of government”.

“A number of potential names had been raised by various stakeholders.”

When pressed by Bragg to identify these “stakeholders”, Moore responded, “I’d have to take that on notice, I don’t know.”