The chief executive of the FAAA has reiterated the possibility that superannuation funds may become a breeding ground for future advisers.
Speaking at an event held by PritchittBland Communications last week, the CEO of Financial Advice Association Australia (FAAA), Sarah Abood, highlighted the need to ensure employees of institutions, including super funds, have an appropriate level of education to provide simple advice.
Late last year, the Financial Services Minister Stephen Jones announced that not only does the government want to see superannuation funds expand their advisory powers, but it also supports the creation of a new class of financial advisers – “qualified advisers”.
“Under our model, there will be a new class of financial advisers who will fill the advice gap by advising on less complex matters,” Mr Jones said.
“It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions.”
Predictably, the financial advice profession was outraged by the government’s choice of term, particularly given that the fight over advice qualifications has been a long and messy one.
While the term is expected to be scrutinised further, as part of the government’s next consultation, what Ms Abood also wants to see is the introduction of a requirement for these qualified advisers to hold a certain level of education.
“We think it’s important that minimal levels be legislated and that those levels be set commensurate with the type of advice that qualified advisers are going to provide. This is critically important to ensure that these people can give clients advice that is genuinely in their best interest[s],” the CEO explained.
She noted that minimal levels of education are also an “important insurance” for employers of these advice providers, including large, APRA-regulated funds.
“It’s the employer that will have the duty to ensure that that advice is not just good advice, because we know that good advice is gone, but that it’s the best interest[s] of the client that will be the test and that’s a high bar,” Ms Abood said.
“We are also suggesting that the education requirement should fit into the current financial advice ecosystem of education that already exists.”
The latter would create a pathway for these qualified advisers to one day become fully-fledged financial advisers, Ms Abood said.
“This would also mean that qualified advisers could play a substantial and positive role in rebuilding the profession and the numbers of professional financial advisers,” Ms Abood said.
She emphasised the importance of ensuring there are safeguards to ensure that the new legislation doesn’t reverse the years of hard work that have gone into the professionalisation of advice. This would also include appropriately defining “simple”, Ms Abood said, to evade issues that were had with general advice.
“We’ve said they can provide simple advice, what do we mean by simple?” Ms Abood said.
Ultimately, Ms Abood said, the key is to safeguard the profession alongside the consumers of advice.
“What a tragedy it would be if we turned the clock back to a pre-royal commission time when the RG 146 requirements technically could be achieved in a weekend,” Ms Abood said.
“We all saw what happened then, and I don’t think any of us want to go back.”