An open letter to the financial planning professional community addressing the draft legislation of Professional Standards for Financial Services Industry

Ian McKenzie

My concerns with the draft legislation and proposed professional standards framework is:

• The proposed legislation and standards will not adequately cover people in the financial services sector who specialise in SMSF, Risk Insurance, and Superannuation and other fields of expertise.
• The RG 146 and RPL, CPD and CPE and years of industry experience is not being recognised in the draft legislation.
• The term relevant degree has not been defined.
• The term other relevant qualification has not been defined.
• Many older advisers may find this too hard and walk away from the profession  – they are just too old and tired, in the prime of their life, they should not have to do exams.

I think it’s unfair not to recognise good advisers in the legislation who are members of professional bodies, who have attended CPD / CPE training over 10-20 years, who are RG 146, who have spent thousands of dollars over 10-20 years doing the right thing, the training and the ongoing professional development.

The truth and reality is of the situation is that one level of qualification won’t fit all.

It is also the labyrinth and different levels of qualification and courses that exist in the current marketplace won’t cover many of the advisers “relevant qualification”.

If older advisers walk away from this profession as a result of the draft legislation not being watered down, and as a result of older advisers not being recognised, then the “adviser stocks” will dwindle.

They talk about a professional year for new advisers, if 30% of the estimated 22,000 advisers walk away from the profession, who is left to mentor the new advisers in their professional year…?

We as a society,  need to nurture people, keep small business going, this draft legislation will not help small business.
It’s good for the economy, the government, society and small business if we can preserve and keep all our existing advisers – and nurture them through this transition process.

I think in order to do that, it would be simply easier to grandfather existing provisions, recognise RG 146, and RPL etc. with some time limits, ie eg minimum 5 years experience.

Professional standards can be easily improved by some other measures in this proposed legislation, without making advisers do more study and exams. That is:

• compulsory to be a member of  a professional body
• standard code of ethics
• compulsory CPD / CPE and ongoing professional development
• compulsory register of training hours
• ongoing training.

The EM put out with the draft legislation implies that financial advisers and financial planners would better serve the community and the communities confidence if they have higher qualifications.

I totally disagree with this view, there are many good people out there that sincerely do give good give advice and care about their clients.

The professional associations have to band together to grandfather the existing advisers in the legislation – and go from there.

This is simply the easier and most cost effective workable solution.  It’s far less tedious than the proposed model, I would of thought.