The Monetary Authority of Singapore announced earlier this week that the financial advisory sector will undergo wide-sweeping changes. Dubbed the Financial Advisory Industry Review, the proposals are geared at raising professional standards and better protecting consumers, and will affect large numbers of insurance agents and financial advisers.
The shake-up will look into areas such as:
- Improving the skill levels of advisers: This could involve getting them to take new exams and potentially raising the minimum educational qualification. Currently the entry requirement is four GCE “O” levels. By comparison, advisers in Australia require at least a diploma.
- Lowering the consumer cost of buying life insurance policies. In particular, the remuneration structure of advisers will be overhauled. This could see a shift from a commission-based model to a fee-centric one.
The review has got some in the industry worried. The Association of Financial Advisers has asked for major changes to be introduced gradually.
Mark Sparrow, vice president, professional and technical, Asia Pacific, Kelly Services, says: “I think any review or tightening of regulations is bound to cause huge ripples. The changes could represent a substantial cost to businesses – whether that’s the cost of training or restructuring their compensation or even the investment in training in new certification – so I can see why there could be resistance. On the other hand, any adaptation of rules that helps consumers get a fairer or cheaper product isn’t a bad thing.”
Stay or leave?
The impact on headcounts remains to be seen. Sparrow reckons it’s too early to tell if people will leave the sector because of the stricter requirements. “Companies and their employees will first need to decide what the changes will mean for them. Individuals may very well reassess their commitment to the industry with the new regulations, particularly if the commissions they previously relied upon are affected.” Although most financial advisers aren’t jumping for joy over the proposals, there hasn’t been too much outcry as yet, he adds.
Raising the bar could also potentially translate into higher salaries. “Moving away from commissions, which are tied to products, and raising the objectivity of advisers may represent a change in job scope and that could see salaries being adjusted.”
In the meantime, Sparrow says like most other front-line functions, recruitment for the advisory sector continues unabated. “There still seems to be a healthy hiring appetite and a lot of competition for sales-oriented professionals in financial services. I haven’t seen any radical change as a result of these announcements.”