If the Financial Planning Association of Australia (FPA) has anything to say about it, the educational standards for financial planners and advisers, in Perth and across Australia, are about to receive a boost. As far as we are concerned, it can’t happen fast enough.
Approved Financial Planners and AMP
We would like to give a little background. Approved Financial Planners and our parent company, AMP, are on the record as being in favour of educational reform for the financial services industry. We have felt for a long time that the standards for entering the industry, both in Perth and nationally, are not stringent enough.
AMP has internal standards that are far more stringent than industry minimums. That is one of the main reasons we decided to partner with them. We feel that it is our responsibility to educate ourselves fully about the products we offer and about how our decisions affect our clients’ well-being.
One of the sadder parts of being a financial adviser in Perth is listening to clients tell us how other financial advisers had mismanaged their funds, either out of ignorance or out of a lack of ethics. We find both of these situations to be unacceptable.
We have long felt that the solution is to require more field-specific education to become a financial planner or adviser. We don’t like the perception that a person can take a weekend course and become a “financial planner.” We don’t like it when uninformed or misinformed “financial advisers” make recommendations or take actions that reflect poorly upon our industry.
We feel that stronger educational requirements are the best way to increase the level of service and commitment to excellence in our chosen field.
The Proposal
Here are the basics of the proposal.
Approved Degree: By 1 January of 2018, entry level financial advisers and planners will be subject to a minimum educational standard of an AQF7 level degree for eligibility to dispense tier 1 financial advice. In addition, they must prove that they have one full-time year of “relevant experience” within the previous three years.*
Existing Financial Planners not grandfathered: Those who are already financial planners have until 1 January 2019 to become compliant with the new educational standards.*
New Curriculum: Financial adviser education within a holistic framework will replace the current RG146 curriculum. In addition, the Financial Planning Education Council (FPEC) will approve a new AQF7 level curriculum.*
CPD Requirements: 90 points or hours of continuing professional development (CPD) courses will be required for all financial planners every three-year period.*
No National Exam: Those who successfully complete the new requirements for certification will not be required to take the national exam.*
Implementation of Co-Regulation Design: A framework will be developed by which “recognised” regulatory bodies can play a major role in helping to regulate and achieve consumer confidence and consumer protection requirements.*
Professional Bodies: Qualifying criteria such as those from the Professional Standards Council will be used to recognise professional bodies.*
Certification Required: The terms “financial adviser” and “financial planner” will only be allowed to be used by certified members of recognised professional bodies.*
Redefinition of General Advice: General advice will be known as “general or product information” and will only include factual explanations and/or information pertinent to financial products.*
What We Think
This proposal would provide a great service to the industry. We are firmly committed to supporting the strengthening of professional standards.
Raising standards would remove a lot of risk for the consumer. At this point, minimal industry standards are so minimal that many people calling themselves “financial planners” or “financial advisers” are not qualified to give high-quality advice to consumers. This creates too much risk and uncertainty for consumers because they don’t know if their financial planner is going to help them or lead them astray. Higher standards will eliminate those who don’t know what they are doing.
Second, as educational standards are raised, performance rises. When performance rises, the customer wins.
Call 08 6462 0888 today.
*Financial Planning: “PJC submission calls for a lift in standards.”