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No man is an island: Why we need to retain experienced advisers

Higher education standards for financial advisers are an important step towards professionalism, but they're not the only thing. The retention of wisdom within the advice community is just as important. CoreData research has uncovered that the advice industry contracted over the past three months, with twice as many experienced advisers leaving the industry as the number of new advisers who joined.

That's a concerning insight, even without the feared exodus of the most experienced advisers from the industry by 2024. It's concerning, because while education and competence are highly valued by clients, so too is experience. And the wisdom from experience can't be replaced by a degree qualification.

As every planner who has advised clients on their life savings during the GFC knows, you can't learn everything you need to know from textbooks. And I know from personal experience that a financial planning post-graduate degree doesn't teach you what you should say to a grieving widow whose husband has died during his first weekend of retirement.

But a wise professional elder can help you. Because they've probably seen it all before

So, with the exit of each experienced adviser from the industry, the advice community becomes weaker. And our clients and other everyday Australians are the poorer for it.

Ask not for whom the bell tolls

About 400 years ago the English poet John Donne wrote Devotions upon Emergent Occasions. The Devotions were written as Donne was recovering from a near fatal unknown illness. His 17th devotion, Meditation XVII, is one of his most famous. A main theme of the devotion, later turned into a poem, was that "no man is an island, entire of itself"; that human beings are social creatures who function best within communities.

We function best within communities because we are held accountable for our behaviour by others we respect. In communities, we are required to overcome our natural inclination to always act in our own short-term best interests. We look out for each other, and make decisions that benefit the collective, not just ourselves.

John Donne believed that whenever someone from the community dies, those who are left behind are worse off. He was more eloquent: "Send not to ask for whom the bell tolls, it tolls for thee".

The advice industry has contracted

Some of my colleagues at CoreData have analysed ASIC data for recent movements of financial advisers. In the three months ended 30 June 2018, a total of 957 advisers were removed from ASIC's financial advisers register, and only 463 new names were added. That equates to a net loss of 494 advisers. More simply, in those three months, advisers left the industry at twice the rate they joined.

Now, these are short-term figures, but they may be just be the start. The official standards body for advisers, FASEA, has proposed education standards that have left the most experienced financial advisers feeling disrespected. While FASEA's consultation has now closed, it is still considering submissions. According to the FPA's member research into perceptions of the FASEA proposals, which was independently analysed by CoreData, around one in three advisers (34 per cent) plan to retire or quit as a financial planner. Of even greater concern, around seven in 10 veteran advisers (68 per cent) with more than 20 years of experience plan to leave the industry.

So, who is detrimentally impacted if this exodus of experienced planners happens? Well, clearly clients, since fewer will be able to access life-changing services. CoreData research tells us that those people who have an active relationship with a financial planner are demonstrably wealthier, are able to spend more, and have greater financial wellbeing and peace of mind than those who don't.

But even those clients who are able to access advice will lose out. They will lose out because the quality of advice will fall. Advice quality will fall because mentors within the professional community will leave, and they'll take their wisdom with them, leaving advisers with shiny new degrees and great mathematics skills, but no professional judgement.

We need a sensible transition for existing advisers

The fact is it's difficult to study in our mature years. Many older advisers feel stressed by the prospect of studying again and they feel disrespected, particularly CFP professionals who are proud of their designation and committed to raising professional standards.

Most of these experienced professionals are highly educated, and they've already displayed a willingness to stay up-to-date with professional development.

Any transition to higher minimum education standards needs to be respectful of the past and ensure that planners don't cover old ground. They'd much prefer to specialise further, and grow, than complete a bridging course.

The community of financial planning professionals can't afford to lose its most experienced advisers. If we lose these mentors, then those who remain will be worse off.

"No man is an island,

Entire of itself.

Each is a piece of the continent,

A part of the main.


Each man's death diminishes me,

For I am involved in mankind.

Therefore, send not to know

For whom the bell tolls,

It tolls for thee."

- John Donne

12 comments so far

Great article. Fully agree with you. I have spent around 20 years in the industry and I plan to quit too. I feel really sorry for my clients who depend on me for my ongoing support and guidance. I would love to stay on for their benefit as their future really matters to me. Lets see.

Recently I helped a person to successfully claim a $1.2 million TPD benefit. He is not well educated and did not know that he may be eligible for a claim. His planner had left many years ago and he had no planner to support him until I made a call to wish to wish him for the New Year. The funds helped him to pay off his loan and the wife did not have to work two jobs anymore and the two little kids are well protected.

CORNEL FERNANDEZ  |  30 JUL 2018   9.22AM
  This is an excellent article and echoes what I have been saying all along.
It's a shame that my industry and its representatives cannot come together and tell ASIC and FASEA to get real and stop using my industry as a kicking stone and money mill for the education system.
Doctors, accountants, solicitors, and judges all have criminals/bad operators, this proves a shiny piece of paper does not make an honest person.
ALLEN GREEN  |  30 JUL 2018   9.26AM
  Thank you, Jason, for the most sensible and reasoned commentary on this issue that has made it to print. The REAL battle will be getting FASEA to see reason.
WAYNE LEGGETT  |  30 JUL 2018   10.38AM
  Great comments !!!
MARTIN HUNTER  |  30 JUL 2018   1.23PM
  The irony is that the new graduate/entrants are going to be required to undertake a professional year under the supervision of an experienced adviser. The best ones won't be around.
ALAN FRESHWATER  |  30 JUL 2018   2.33PM

Thank you Jason for a very prescient and well reasoned article. Certainly the best I've read regarding experienced advisers and their current 'misunderstanding' with ASIC, FASEA et al.

I was a bit disappointed you didn't discern the financial planners (investment advisers) from the pure risk advisers as there is a completely different discipline there. Both are important to a client's best interests but it seems only the investment planners, by inference, are the only breed ever discussed in these forums.

Thank you for at least raising the 'experience issue' as you have. Let's hope the gurus at ASIC/FASEA read these pages, for the good of everyone, before they make ill-advised decisions based on political expediency - the most harmful type.

BRIAN HOWARD  |  30 JUL 2018   2.56PM

The irony of the of the FASEA changes is that whilst we won't become uneducated dinosaurs until 2024, that during the transition period we will apparently be good enough to mentor new entrants whilst they do a professional year. After which our years of experience and professional development will be no longer relevant.

No other profession, be it nursing, teaching, accounting or law has done this to their respective members in the qualification transition period, and in fact there are nurses, teachers and accountants practicing today that don't have a degree let alone a post graduate qualification.

CRAIG ARMSTRONG  |  30 JUL 2018   6.42PM
  Congratulations on presenting a well reasoned commonsense article.
Its good to read some balanced logic in a environment where knee jerk reactions to the challenges facing the advice industry is the norm.
There is no substitute for decades of experience. No piece of paper from an institution will save clients from advice which is either wrong or not in their best interests.
TONY TILENNI  |  30 JUL 2018   7.48PM
  Jason, I agree. I study and read to keep updated and have absolutely no problem with studying to improve my skills, knowledge and to add value to what I can offer my clients, but I do not want to again repeat what I have already done.
When I started in 1985, I was in the midst of an accounting degree which I ceased in order to do the two-year LUA Financial Planning Course that covered Investment, Savings, Superannuation, Retirement Planning, Insurance, Taxation, Estate Planning and Centrelink and Veteran Affairs extensively.
Then they decided a Diploma was required so I completed DFP 1 to 8 and went on to qualify as a CFP(R) in 1997. I have also completed accreditation to be an SMSF Specialist.
For over 30 years I have guided clients to achieve their financial goals through life, legislative and economic changes. I am a proud winner of a National FPA Value of Advice Award, a member of the US MDRT Top of the Table and passionate about delivering excellent advice and service that simplifies our clients lives and enables them to live without financial worry.
I employee a team of 16, all who I have either assisted to learn financial planning from scratch or to take their skills to a superior level and can provide written testimony from those individuals that workplace experience and training was of greater value than formal learnings.
I also agree that if I am required to restudy fields that this tutoring should not be delivered by someone with more formal qualifications but less knowledge and practical experience.
And if common-sense doesn't prevail then my preference would be to study Economics, Psychology or MBA or go back and complete my Accounting Degree to complement my extensive expertise in Financial Planning rather than study something that I already know inside-and-out again; as that is incredibly wasteful and frustrating.
LEANNE BULL  |  31 JUL 2018   11.58AM
  I can only say that I finally feel I'm being heard, and add my voice to those who have already responded to this article. Many thanks Jason. Keep getting the message out there for us.
SUE ALLEN  |  6 AUG 2018   9.33AM
  Great article!
NIGEL FENTON  |  7 AUG 2018   4.18PM

Where do I fit into FASEA proposals?

Female single LIcensee, Adviser under my AFSL, Organisational Psychology/HR 12 years qualified and experienced teacher taught at all levels of education incl University. B.Business Management, Psychology, ADFS 1-8 and Dip Ed. 20 years experience in this industry. Hmmm.

PHILIPPA HUNT  |  8 AUG 2018   7.39AM
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