Qualification questions may cause concerns
A crackdown on adviser qualification requirements could prompt some to leave the industry, it has been claimed.
Thursday, May 28th 2015, 6:00AM 
3 Comments
by Susan Edmunds
The Financial Advisers Act review issues paper was released this week and outlines the areas the review will consider.
Among them are adviser qualifications and ethical requirements, adviser designations, classes of advice, the role of professional bodies and how well regulation is serving consumers.
Massey University director of academic programmes Claire Matthews said the questions raised around ethics and education standards were likely to be the most concerning to some advisers.
The paper says: “We seek feedback on the adequacy of the ethical and education standards that apply to different types of financial advisers, which currently differ significantly. There is debate as to whether these standards should be aligned and/or increased….What is an appropriate minimum qualification level for AFAs? Do you think that RFAs (for example insurance or mortgage brokers) should be required to meet a minimum qualification relevant to the area of advice they specialise in?”
Matthews said: “For some that’s a major issue… There does need to be some changes there but for some advisers the possibility of changes will likely make them very uncomfortable. Some will welcome it but there are some for whom those sorts of questions are concerning.”
She said, depending on the outcome of the review, the sort of moves being mooted – such as the suggestion that minimum qualifications be introduced for RFAs - could push advisers out of the sector. “That would be unfortunate given we have too few already.”
The issues paper has highlighted that consumers seem to lack understanding of the financial advice regulations.
It says: “A significant majority of consumers spoken to by MBIE have indicated that they do not really understand the differences between classes of financial advisers and their different obligations and abilities to advise on different products and to give different types of advice.”
Matthews said the acronyms that were used by the industry had little meaning to the average consumer.
She said the paper seemed to indicate MBIE was open to receiving lots of information. But she said the review would have to be judged by its outcome.
“I have no doubts the process will be appropriate and do all the things it needs to do but the real success is what comes out the other end.”
She said advisers, their clients and the general public should be encouraged to get involved and express a view. It was not necessary for a submission to answer all 75 questions, she said.
“[They can] pick out three or four or even just one question they feel strongly about and provide input on that. It’s important to have input otherwise the review is simply not going to achieve what it is has set out to.”
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Comments from our readers
when you add in the implications of the Trowbridge report where the regulator is also looking to force down adviser revenue in the face of increased direct and indirect costs to adviser businesses, it is no wonder why the AFA numbers are decreasing - so how does this benefit the clients???
inflation up, mps pay up, average wages up & property prices up (i mentioned property prices because we all need a roof over our heads).
advisers remuneration down plus penalty - increase costs - AND must serve consumers better. don't they like us. most definitely need to recruit more people to join us.
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1. some advisers will leave (i suspect many older ones) = lesser advisers. is that good for consumers? btw, have you guys not attended any seminars or open your eyes and see the percentage of old advisers? i saw many grandfathers or nearly there.
2. high compliance costs = hard to attract young graduates. they are likely to be indebted with student loan. will they pay for compliant cost to get a fee base or commission job, ie., no guaranteed income? will you?
3. higher education = more money spent. should advisers be paid more, same or less commission or charge more, same or less fee? that is, do they deserve a fair return on investment on their money spent on the higher education required. what do you think? how is that going to benefit the consumers?
questions:
1. can it guarantee more professional and ethical practices?
2. assuming there is a decline in the number of advisers (i can guarantee the most likely scenario) - how is that going to benefit consumers?
3. do we always to copy or cut and paste other countries' practices? if you guys can't come up with original & better ideas, why are you here for?