“It is by education and training that advisers (and staff more generally) are made aware of why certain procedures are to be followed. In some cases the procedures may reflect legal requirements; in others they may reflect the particular requirements of the relevant licensee. But in every case, those who know why the step is required are more likely to take it than those who know only that the relevant manual requires it. ”
— Commissioner Kenneth Hayne, Interim report p143
For a body designed to improve the reputation and professionalism of the industry it represents, FASEA has come under sustained criticism from a variety of sources; Licensees, the FPA, the AIOFP, the AFA and even compliance thought-leaders.
Some of the criticism may be legitimate but, in at least one respect, The Financial Adviser Standards and Ethics Authority Limited has got it right; CPD needs to be reimagined to emphasise competency and capability over convenience.
In our view, it is well beyond time for Licensees (and the industry) to recognise that discretionary reading and multiple-choice exams does little, if anything, to train advisers and develop their professional skills. It is even less effective in testing, and confirming, adviser competency and capability.
FASEA to their credit, have recognised continuing professional development as a critical obligation of advice professionals. In opposition to an entrenched and well-funded online-education industry, they’ve sought to shift advisers from convenient CPD options towards more effective and more credible ones.
We’ve long argued for the need for this to occur, and we think that FASEA’s transformation of CPD is based on their acknowledgement of a common industry gripe: most CPD training is pointless.
The importance of “Why”
“And you say Why?
You say why?
You say why?
Don’t ask me why”
— Annie Lennox / David Allan Stewart, “Don’t ask me why”
Before we drill down into CPD, we’d like to start by examining one of our core beliefs, and one that underlies every component of the Assured Support services – to succeed in a challenging and changing environment, people need to learn how to learn.
In a professional environment, and in a complex and complicated one, unthinking compliance is an extraordinarily poor public policy outcome. The results, although compliant, are often regressive and sub-optimal.
Professionals aren’t ‘unthinking compliance-bots’. They aren’t programmed to comply but instead routinely exceed minimum legal and ethical standards because of their success in applying their knowledge, wisdom and understanding to their clients’ needs and circumstances.
Applying knowledge, and learning how to learn, means becoming aware of ones’ own assumptions, biases and thinking processes. It’s about starting with why and embracing deliberation, reflection and consciousness.
We are all aware that expert knowledge is often domain specific. In the financial services industry, many advisers have amassed a vast domain of knowledge and operated in an environment that they know best and in which they excel.
However, FASEA demands more and the reasonableness of their demands is reinforced by the litany of scandals, failures and contraventions that are routinely covered in the mainstream media. With the pivot now required, advisers will need to reflect critically on their own conduct and competency, identify the ways their actions contribute to these problems, then change what they know and how they act.
To succeed in this tougher regulatory environment, we need to learn how to learn, which means becoming aware of our own assumptions and thinking processes.
However, with the pivot required in this industry, advisers will need to reflect critically on their own behaviour, their knowledge and identify the ways their actions contribute to the organisations’ problems. They’ll then need to reconsider what they know and how they act. Not once, but always.
Learning vs Teaching
In Arie de Geus’s, The Living Company, the author suggests that in the past 50 years, the world of business has shifted from one dominated by capital to one dominated by knowledge.
In his study of Companies, he observes that the average life expectancy of a multi-national fortune 500 equivalent is between 40 and 50 years, with a third of those listed in 1970 have vanished by 1983.
de Geus suggests that to be sustainable, an entity must develop the capability of shifting and changing, of developing new skills and attitudes and embracing a capability of learning. And that capabilities of a company restrict the number of places where it can put its foot today.
These same principles apply to individuals.
But how many advisers, and licensees, honestly and effectively work to develop new skills and attitudes?
In Chris Argyris’s journal article Teaching Smart People How To Learn , the author suggests that although companies need to address the learning dilemma, most aren’t even aware that it exists. He cites a set of governing values that inhibit their ability to learn, which include:
1. The desire to remain in unilateral control
2. The goal of maximising ‘winning’ while minimising ‘losing’
3. The belief that negative feelings should be suppressed
4. The desire to appear as rational as possible
Argyris suggests that together, these values betray a profoundly defensive posture: a need to avoid embarrassment, threat, or feelings of vulnerability and incompetence.
Some might argue that these values are characteristic of an advice industry that embraces CPD as a validation and confirmation tool. An advice profession, on the other hand, emphasises professional development and challenge.
This is where FASEA gets it right.
The need for tailored, engaging and effective training
“A man’s got to know his limitations”
— Harry Callahan, Magnum Force, Warner Bros 1973
To return to Commissioner Hayne’s observation from Argyris’ uncomfortable truth, we’ve also noted that too often training is delivered without providing an answer to the crucial “why” question.
As adults we seem to lose the motivation, curiosity and willingness to pursue the “why”.
Maybe, before we commit to a year of generic online multiple-choice content, we should take time to ask ourselves some simple, but important questions about our ongoing professional development:
- What do I really know?
- What don’t I know?
- What do I really need to know that I don’t know?
- How do I learn that?
In our view, professional advisers need to take a more active and considered approach to developing their skills and refining their knowledge. In fact, we’d argue that customised face-to-face training is the best way to attain the skills, knowledge and uplift demanded under the new FASEA regime.
The first step towards effective learning
“A journey of a thousand miles begins with a single step”
— Laozi, Chapter 64 of the Tao Te Ching
There’s little doubt that the advice industry is required to pivot and evolve, to question its skills, expand knowledge and attain new capability.
But prospering in this new environment requires more.
Ongoing success requires advisers to develop an ability to ask “Why” – to know when and how to apply their knowledge, intuition and experience – rather than simply follow the relevant manual, risk framework, process and practice.
Your training, and your ongoing professional development, needs to be focused on equipping you with the knowledge, wisdom and understanding that characterises professionalism.
To reap these benefits, you need to embrace challenge over convenience.
Rethink your approach to your professional development. Demand more. Expect more.
Now is the time to start engaging in learning that facilitates the “why” question.
Ask yourself critically, and without defensiveness, what do I really know; what don’t I know.
Then ask yourself, why is that step required. Question your assumptions rather than blindly taking it without question.