Opinion: Advice apprenticeships to clean up industry

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As a financial adviser for more than 37 years (6 years in South Africa and then in Australia since 1982), CFP Paul Levy has also held the roles of BDM, state manager of an international life insurance company and state manager of a dealer group. He shares his vision for a bright financial services future:

The two most important topics affecting the longer term nature of our industry at the moment, in the face of FOFA, are client best interest and achieving professional status.

Unfortunately, it is unclear how many advisers are operating within Australia. My research suggests that there are around 20,000 advisers in Australia. My sources also inform me that only about 2,000 are affiliated with the AFA and about 7,500 with the FPA. This is most unfortunate because advisers have become disjointed without true common representation or protection for all. We have become an industry devoid of unification and weakened by not having one voice.

The great majority of advisers are hardworking, honest professionals, clearly doing everything they can to comply with current rules and regulations in an attempt to operate under “client best interest” and build longstanding professional relationships with their clients.

It is my belief that whilst our industry could not and should not “self-regulate”, we should – with the support of ASIC – put various mechanisms in place designed to give everyone what they want and what our industry so desperately needs.

Change can only come from within the industry.

Firstly, all financial advisers and life risk advisers should be compelled to join either the AFA or the FPA. A unified combined body representing all advisers would be preferable.

It is clearly understood and accepted that most other professions require, in addition to joining their industry body and achieving the appropriate academic study, a period of apprenticeship and/or “on the job training” in order to achieve their highly regarded and prestigious professional status. (Chartered Accountants are required to enter an Approved Training Employer practical experience program and be mentored by an Australian Chartered Accountant, Lawyers require work experience and Practical Legal Training, etc.)

All financial advisers and life risk advisers should be compelled to achieve the current minimum education standard and then be apprenticed to either a CFP or FChFP for on the job guidance and training according to how long they have been authorised. I suggest the following possible arrangements:

Period of time authorised

Period of required apprenticeship

New Entry up to 6 months

12 months

6 to 12 months 

6 months

> than 12 months but not yet CFP or FChFP

3 months

I understand that my suggestions may be considered controversial but we as an industry have to start somewhere. As a result, our industry will enjoy a much higher level of public acceptance, respect and dignity, and the quality and appropriateness of advice given to the broader community of clients will be far superior. It would be far more difficult for a crooked adviser to get away with developing bad habits, giving bad advice and cheating the system.

Our industry does an enormous amount of good on a daily basis and my single motivation here is to win back the respect and appreciation that our industry so richly deserves that we have lost over the years.

Do you have an opinion you'd like to share? Email kathleen.payne@keymedia.co.nz

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  • Leadership Free Zone on 12/06/2013 11:25:44 AM

    Paul basic trades do 4 years and you thing it might be controversial to suggest up to 12 months. Try 5+ years and we might be getting close to starting point. Remember poor financial advice has the potential to utterly destroy a person's financial life so with that level of responsibility the 'apprenticeship' period needs to be long but given we're largely an institutionally owned sales force, I wouldn't count on support from our masters. As for FPA and AFA and alike, they're industry bodies (represent member interests) not professional ones (represent the interest of the public). There is difference but it's lost on most.

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