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CWG on a 'witch hunt

Future qualifications for financial advisers is a hot topic at the moment, but they may well be meaningless unless other changes are made, Jon-Paul Hale says.

Monday, April 2nd 2018, 7:52PM 1 Comment

by Jon-Paul Hale

Qualifications is an interesting one and one the Code Working Group seems to be on a bit of a witch hunt about.

I will get it out front, I agree with Partners Life position on this concerning life insurance.

It is not the qualification that determines the outcome for the client; it is the moral values of the adviser.

Time and time again we hear stories where the replacement for new cover either came with adverse terms or plain old poor execution that a financially driven adviser has put in place when existing cover would have worked.

Yes, qualifications will help with some of this, by lifting education levels you solve some of the bunny mistakes. I get that.

At the same time, you do not change the underlying moral fabric of someone with this sort of education. They are either going to do right or wrong by the client based on who they are.

I read an article last week where the research behind it found that those doing higher education papers learned enough to regurgitate and pass, before forgetting the information and going back to their pre-education biases, because their underlying beliefs did not align. To me that is crazy, but I am pretty open-minded.

As I said in my previous article, having a process and being able to define how you get your numbers, means the regulator can judge how effective and consistent your advice is.

Education adds to that. However, there's a point with life insurance planning, where debt plus goals plus education plus final expenses plus X years of income (whatever your calculation is) just can't be improved on with more adviser education. That is if you expect the adviser to remain an adviser and not do something easier and potentially more lucrative with their higher education.

Frankly what more education usually does is add additional layers of information to the advice given and make it less understandable for the target audience. I know, I originally trained as an engineer, so I get the overly complex issues that come out of overcooking the advice piece, been there done that.

At times I feel there's a bit of ’the RFAs skated through, now its time to make them pay’, from the AFA end of town.

Well yes, and no, most RFAs have listened and moved to a more six-step approach and are doing a better job than they were in 2010/2011 when regulation last changed.

Yes, many haven't completed Level 5, nor have they gone AFA if they have. Frankly, why would you, when the bar was set where it was?

However, with a pragmatic approach to education, Level 5, licensing with a clear understanding of the advice given, and how it is both delivered and managed in an adviser business, will go a long way to addressing the concerns both the government and industry have about the quality of advice.

Add to that a moral code and measure, and we start to gain real traction on the underlying issues.

  • Level 5 needs an ethics piece, especially one that highlights what a conflict of interest is and how it is to be managed.
  • As to the insurers and financial services providers need to come together to remove the ratbags, rather than move from one provider to another, as they burn their bridges.

There needs to be something around that last one from an evidentiary perspective, to avoid malicious practices brought by personal conflicts, as we have also seen in the past in our industry.

Sure there's a lot to do, at the same time keeping an eye on the end goal is important, better outcomes for the general public from financial services is where we need to focus and avoid the petty finger-pointing along the way.

Tags: Churn Code Committee

« Question: Can you define what you do?Advisers need to lift their game to help clients »

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Comments from our readers

On 5 April 2018 at 11:22 am Paul J Burns said:
While I sincerely agree with J-P and Naomi on the critical place of good moral character in the adviser space, I sense that the prevailing culture and fast changing societal norms and pressures are making the moral landscape (sadly for an increasing number of people) a lot more fuzzy and murky. Hence why a good starting point, may involve agreeing on a standard moral code. If anyone can point to such a code (that is superior to that posited by Jesus Christ), then they'd get my vote for all the gongs being doled out by the Nobel Prize Committee.

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