"We don't need no education": Reflections on competency, training and education
The popular view of acceptable 'training and education' for financial advice professionals seems to increase with each new licensee failure and public scandal.
While most advisers admit the initial base was quite low, expectations have increased dramatically. Now, with new education standards looming on the horizon, the landscape of financial advice looks to change forever.
This is a great outcome for the emerging advice profession.
Training, qualifications and competency have always been hot discussion points for financial advisers and the latest shift has certainly increased the volume of that debate. While I'm generally supportive of the reforms, I appreciate that there are concerns that the bar may be set too high for some.
I can already imagine some veteran advisers reaching into their vinyl stash dropping a needle to blast out Pink Floyd’s ‘Another Brick in the Wall’. They "don't need no education".
As reassuring (and deluded) as that position may be for them, the reality is that education, and new standards, will be prescribed every adviser and aspiring adviser regardless of their experience, age, back-ground or contrary opinion. If you do not meet the education standards, you don’t pass go.
According to one of Australia’s foremost recruitment agencies Hays, there is already a shortage of candidates for available roles and the changes in education may exacerbate this problem if the possibility of existing advisers walking away from the industry becomes a reality.
Some might celebrate this winnowing as a consequence of transitioning from a cottage industry to a profession, but this attitude both trivialises the human impact and underestimates these loss of knowledge and experience and the impact on their clients. Relationship management, empathy and understanding are key aspects of effective financial advice so spare a thought for the retail clients who may now face the prospect of losing the person who helped them make some of the most important decisions of their lives.
Unsurprisingly, there seems to be some a high level of apprehension amongst advisers about the time, effort and amount of work needing to be done to meet these new requirements. Many believe that nothing will change the way that they provide their advice and question whether there will there really be any benefit to them for investing in these changes. In my view, it's always important to acknowledge that you don’t know what you don’t know and these new requirements may provide the direction and create a structured path required of a trusted advice profession.
The Financial Adviser Standards and Ethics Authority Limited (FASEA) was established in April this year to set education, training and ethical standards for financial advisers. These new standards are designed to help strengthen, improve and support the industry and ensure that consumer confidence is being built. It's a stupendously ambitious goal. The education framework aspires to increasing the education and competency of new and current advisers and restore consumer confidence in the value of advice. In the wake of recent coverage, is it any wonder that consumers need reassurance that the adviser they are dealing with is professional and trustworthy.
Optimistically, every adviser will soon have tertiary qualification, every adviser will have proven and standardised competencies and, hopefully, the industry’s reputation will improve as consumers notice. Realistically, not everyone will enjoy this new planners' paradise because the changes will cause significant interruptions to the way in which the advisers conduct their business until they complete the required study.
The clock is ticking:
From 2019: New financial planners will have to meet four requirements:
- an approved degree,
- a professional year,
- pass an exam and
- be subject to a code of ethics.
From 2020: Everybody will need to be subject to a code of ethics.
By 2021: If you need to complete the exam, it will have to be completed it by January 1, 2021.
If you do not pass by January 2021, you will not be able to practice from that point.
By 2024: If you do need to do further study, you’ll need to have that completed by January 1, 2024.
Although the clock is ticking, you still have time on your side. The sooner you start, the more options you are going to have.
Subdividing these requirements into manageable tasks will enable you to easily meet these timeframes but, if you procrastinate, or don't start to prepare you'll likely never catch up.
Stop living in the past. As the great Australian philosopher once advised "Shed your skin and let's get started". Professionalism awaits so get out there and prove you have the knowledge, skill and experience the public expect of financial advisers.