Financial planners still lag decades behind accountants in terms of educational requirements for those who practice within the two sectors, according to the head of one of Australia’s largest financial planning university programs.

Only an Australian Qualification Framework (AQF) 5 level of education is required to practice as a financial planner here, while accountants need an AQF 7 level of qualification.

Adrian Raftery, course director of financial planning and super at Deakin University, suggests “blind freddy” can see the current low standards of financial planners’ education requirements is a cause for concern.

“The accounting profession made this recommendation back in 1964, and yet 50 years later, we don’t have the same level for financial planning. I think in terms of consumer protection, it’s dreadfully important that [Matthias] Cormann and his team still abide by their free market principles, but still have a base level concern that consumers are getting appropriate people providing them advice,” Raftery says.

Recommendations, not legislation

A number of inquiries and commissions are currently in the process of assessing Australia’s financial services landscape, including the Financial System Inquiry, the Parliamentary Joint Commission inquiry and the inquiry into the Scrutiny of Financial Advice.

“At the moment it’s still AQF5 [minimum requirement] as the law currently stands. There have been a number of government inquiries over the years, but the government hasn’t enforced them. That is my huge concern and it really is the elephant in the room,” Raftery says.

Despite the lack of a clear mandate from the government – driven by what Raftery believes is an innate, overbearing adherence to strict free market principles – he is optimistic.

He says Deakin University has had strong interest from some of the biggest financial institutions in the country, who have invited them to tender for the right to train their financial planners up to AQF 6 level and beyond.

“We’ve experienced increasing numbers compared to the same time last year, which is quite encouraging.

“Some of the big dealer groups have approached us directly about having all their authorised representatives up-skilled over the next three, four or five years,” Raftery says.

New ethics, soft skills subjects

He firmly believes financial planning “is not a churn and burn, cut and paste from one Statement of Advice to another.

“We need to think about that, talk to the client, communicate with them, ask the right questions and more importantly listen to the answers that are given.

“It even comes down to listening to tone of voice to pick the real priorities of clients…you can’t get that just from a piece of paper, you get that from listening, then you write your SoA based on those specific needs,” Raftery says.

For this reason, Deakin has added a subject called ‘managing client relationships’ to its offering within the financial planning and super program.

Raftery describes this as a “bedside manner subject” in that it provides students with the softer skills in how to deal with clients the right way.

“The industry has just been saying ‘yes, this is exactly what we want. We want [our ARs] to be more work-ready rather than just being technically proficient,” he says.

Not only has this been enthusiastically received by financial planning dealer groups and individual students, but also the university’s staff, who enjoy the opportunity to teach in a different way.

Raftery explains his faculty has worked closely with the university’s nursing and medical faculties in creating the subject. This draws on many of the same principles of patient care that apply to financial services clients. 

Original Article published in Professional Planner on January 12 2015.