US
I was recently looking at the ASIC website (tragic, I know) to keep up to date with any changes in the industry. I was surprised to see that within wealth management, on what seemed a like mandatory basis, there were some rules for financial planners. One particular regulation sets out the need for advisers to provide advice appropriate to clients’ needs.
But hasn’t that always been the case? I got in touch with a few fin planner contacts whose knowledge I think highly of and asked if the rule seemed too obvious to them. The answer was a rousing: “of course!”. So what has been happening? I turned to a number of websites and found that due to the expansion of the wealth management sector, there has been a growing demand for financial planners.
One thing that really caught my eye was the new trend of franchisee advisers. I am not referring to financial planners who have had years of experience with an institution and then get their own dealer’s license. I mean there are now franchises offered where no financial services experience is required: they train you over a few months, you get your RG146 and then start up your own “business” from their referral network, or that’s how it was explained. However, I couldn’t actually deduce much more from the information I was given, so forgive me if I am factually incorrect.
Now, I know I sound extremely conservative here, but given these new supposedly “tighter” regulations within financial services, shouldn’t we have stricter policies and educational requirements for those who are in charge of clients’ money? You need a law degree to be a lawyer, a medical degree to be doctor, and a commerce degree to be an accountant, so why don’t you need a finance degree to be a “doctor” of private wealth, or at least have a few years’ experience within an organisation before you face clients?
Too many bad planners out there?
The RG146 qualification was a great start to weeding out bad eggs, but now it seems anyone can get their hands on it, despite their work experience and educational background.
I’m not being an education snob, but if I were to leave my money in the hands of someone else, I would want to know that he or she understands all aspects of my investments and of financial markets in general. I have a friend who was burned just over a year ago because her friend, who had left the fire brigade to become a financial planner, placed her in a fund for the trails. When the fund went into administration, she lost her money.
Perhaps I am overreacting to those fin planners who have no financial services background, no business/finance-related tertiary qualifications, and who think they are ready to advise clients after only a few months of training. These people are also potentially flooding the wealth management employment market.
I understand that this concept gives those who have dreamed of working in finance a leg-up into the business and that it might be a viable option for those left redundant by the GFC, but I fear it may give experienced financial planners a bad name due to mistakes made by novices, and possibly taint the reputation of the industry as a whole.
But tell me (in the comments box below), am I in the minority, along with my old fuddy-duddy financial planner friends? Are you a financial planner concerned for your own reputation? Or even a potential franchisee looking to start a new career who disagrees with me entirely? What do you think?
its retail Finance, what do you expect, its a sham, simply requires noise traders which most common people are. retail customers have no idea about Finance thats why they are stuck in their low paying jobs asking someone else for advice, why does anyone need some clean shaven chump to invest their money in an already diversified fund and to pay a comission to both parties when they could simply buy that fund themselves, shows you know nothing.
Try getting a job in a major investment bank with out major teritary quals, or a hedge fund without a PHD in mathematics etc.
Its a salesmans job simple for low end customers,
You should have seen the ones who left when PS (as it was then known)146 came in :) I work in the industry but am seriously contemplating moving on.
For the record, I don’t think you’re being an education snob (I’m about to commence my 2nd Masters). If you’re holding yourself out as an expert then I believe you should be.
The problem is there is such a diverse range of education and experience amongst advisers and it is nigh impossible for the layman to discriminate between. For those working in the industry, the remuneration structure doesn’t support or encourage education either. As for reputation, I’d rather say I’m a parking inspector at BBQs..
Then there’s the industry bodies. Conflicted at best.
There are some really helpful ones out there. If you are after an adviser, make sure you grill them about their education and experience. In the first meeting (usually free), are they genuinely interested or are they just sniffing about for FUM (assets on which they can charge adviser fees on)?
That franchisee model (I think you’re talking about AMP) has got disaster written all over it.
Most financial planners are sales people who have a basic understanding of finance. However they are very good at talking to a client and getting them to sign on the bottom line. I deal with planners on a daily basis and there are only a very small group of them who I would bother getting advice from, although the advice from this select few is very good. Until the focus moves from been sales people to actually qualified financial people it will lack true credibility.
Previously I worked in head office for a well known franchisee firm as you described and I can tell you from first hand experience I took a phone call from a diploma qualified planner in one of the offices who asked for “the phone number of the guy at the stock exchange who decides what price shares will trade for on a day”.’
In my current position within a boutique firm I have dealt with a different planner from the same franchisee firm I used to work with regarding a client leaving us and going to them. The planner told me how he was going to withdraw the clients money from a pension account and place it all into an investment account so I queries him about what CGT implications this may cause the client to which i was met by a couple of moments of silence followed by “Oh, i hadn’t thought of that.”
I really hold some reservations regarding the existing system and how easy it is to attain RG146 and thus practice in the exact sort of franchisee firms you mention.
well, I have a B.Com degree (major: Financial Accounts & Auditing) and have recently completed my DFS (FP) working in the largest Industry Superannuation fund for 4 years in a client serving role. But I am not getting the job of a para-planner and am tols I don’t have experience???? I though I did have experience, skills and qualifications.
Well, I am looking to enter the industry after 15 years in the healthcare sector. I chose the Grad Dip over the DFS as I feel it is a stronger qualification, but its all academic at the moment. I’ve begun my job search this year and I hear a lot of “you have no experience”.
I don’t feel I could provide sound financial advice in the timespace of a few months as a franchisee. I feel the banks are going to offer me the training and support that I need initially as I Iearn the trade. As for facing clients, that’s what I would want to do in my first year (with some limitations), as that’s the background I come from – healthcare. Is that reasonable?
Whether you have an education or not, if you want that trail you’re going to recommend that product even if its not appropriate for your client. No difference, if you’ve been at it 2 months or 20 years. Its not the RG146 thats going to improve the standards. The RG146 entry level is very low. It is the legislative changes of banning commissions from 2012 and fiduciary duty that will give customers more confidence in the industry.
I think DFS& planning RG 146 is very rigor and comprehensive. It is just like a class room where some students are more capable then others but cannot dismiss the curriculum. I have MBA and Master in accounting but having a lots of trouble getting into Financial planning industry.
Some are good – most are bad
I agree with tds comment – I was once told to ask these Planners how successful have they been in creating their own wealth – it doesn’t all come down to getting a piece of paper being degree or RG146!!