The debate over the health of Australia's financial services education sector has been brewing for many years.
The competitive nature of the sector, quality and length of available courses as well as the introduction of institutionally-tied academies and greater interest in the industry at a university level has left many disenchanted by the future of advisory education.
Eighteen months ago, education was not the glaring issue it has now become.
Today the situation is very different.
State of play
Not only are Australia's educators feeling the pinch from financial markets, but as the industry starts to cut costs, the search for quality is emerging as the priority over quantity.
Those willing to spend a pretty penny on education are now only willing to do so for the right course.
"I think you almost have to say that financial services education has, in our view, reached an evolutionary dead end," FPA deputy chief executive and head of professionalism Deen Sanders says.
"I'm hearing this from members, I'm hearing it from educators, I'm hearing it from a whole range of sources, everybody is quite disappointed by how education has been forced down this evolutionary dead end with the introduction of FSR [financial services reform]."
For Association of Financial Advisers (AFA) chief executive Richard Klipin, the state of industry education has not hit the doldrums, though he believes there is definitely a need for greater scrutiny.
"The issue around adviser education, and it's not just in financial services or financial advising, is the pathway to greater career access and greater competency obviously is education," Klipin says.
"In the last two or three years, the overall trend in adviser education is that people are doing more of it."
The industry's desire for quality is certainly something that resonates with Kaplan Professional national sales manager Brian Knight.
"What we're seeing is that there is a real focus on quality of education. So what we are seeing is people who are either wanting to be or looking to get back into the market - they are looking to become better candidates," Knight says.
In the case of large organisations, there is also a real focus on locating any gaps in staff education and offering retraining in niche areas, he says.
"There is a lot of focus that they [corporates] look and see they may have a gap. They'll look at things such as gearing or portfolio construction or self-managed super funds. They are looking at areas where they think they can improve their skills," he says.
"Companies are saying 'can we assess where the gaps are with our people and improve the quality?' I think there is a real flight to quality."
The renewed interest in quality has also helped reopen the debate on supposed short-cut, short-course diplomas versus university-accredited diplomas.
"There are a lot of people around who think that it should go to university degrees and I've always argued against that because the diploma to me is the right standard," Pinnacle chief John Prowse says.
"I do think the good guys are winning on that one. I think the industry has rejected the model of fastest, quickest way to get compliance, and in the last 12 months there seems to be a good shift between people wanting people to be properly trained."
For Mentor Education managing director Mark Sinclair, the themes for the industry are twofold.
"There are two levels. There are dealer groups themselves who are keen to upskill their experienced advisers in areas that they can see increased revenue potential," Sinclair, whose stable of companies includes RG146 Training Australia, says.
"[The second is advisers]. They are keen to increase on paper the credibility of their CVs, and there is a journey that they are going that is diploma, advanced diploma and then either the fellow chartered financial practitioners [program] from the AFA or the FPA's CFP (certified financial planner), and that's quite a nice journey. It takes a number of years but it reflects well on them as credible practitioners in this professional space."
Fast-tracking debate
Despite the doom and gloom talk, in Sanders view there are glimmers of really good and interesting initiatives emerging. However, it is not the vibrant education environment it once was.
"What we are seeing is that a lot of education is focused around RG146 when to our mind, and we have been very public about this, it is a failure of both imagination and inappropriate response to regulations. It's not the intention of the regulation," he says.
"Even on the idea of the entry-level education we're just not really seeing the education that we think nurtures the future of financial planning and frankly the future of the profession.
"People will argue about this and say 'well hang on, this is what people want to buy'. Well I think that's just such an extraordinary shallow misunderstanding of this because you've only got to look to the fact that every large institution has formed its own academy in the last two years because they are simply not happy and they have decided, as we had decided a long time ago, this would not be the category that would carry us through as a profession or even as an industry."
Prowse says the past 12 months have shone a stark light on the providers of financial education.
"We think from the providers point of view there has been some polarisation, up til about 12 months ago on both the demand and supply side, between quick let's get the RG146 sign-off done and people who really want a comprehensive education in financial services. Luckily the good guys seem to be winning that argument now," he says.
"Some of the fast-track providers seem to be toning down some of their rhetoric - I don't know if some of the offers have actually changed that much, and certainly a lot of the dealer groups seem to be a bit more receptive about what attitude the FPA would like them to have, which is we really do need people who are well equipped and skilled to do the job coming out of these courses, not just people with a quick sign-off for compliance reasons."
The suggestion RG146 is classified as a fast-track solution is misleading, Sinclair says.
"You've got to do the appropriate course for the role you perform. Sure, if you just did the basic RG146 course, just that, and then assumed that you knew everything then that would be absolutely wrong," he says.
"What you do when you've done your diploma is that you go and join a dealer group and then you become inducted, you learn about products, and you go on to do your CPD (continuing professional development) and you keep refreshing your knowledge, you then go on to do additional courses, whether it's in soft skills or advice processes or whether its part of the diploma, you've just got to keep learning.
"And the professional associations have a responsibility to drive that ongoing education and from that point of view I'm excited that people are saying don't just stop at RG146, go on to do the full diploma, do the advance diploma, go on to become a fellow or a CFP, that is really important."
Industry action
In March this year, the FPA announced it would introduce higher level training and professional development standards from 1 July.
The standards will be delivered through the release of the association's new CPD policy, Sanders says.
The new CPD policy provides a broader and more rigorous framework for FPA members to undertake ongoing professional development to ensure optimal advice is provided to people seeking the help of professional planners across Australia.
A 12-month consultation process with members and stakeholders distilled a final policy on CPD, which was approved at the FPA's March board meeting.
"Educators have been telling us for a very long time that they want to be the professional motivators that they always once were. To my mind a profession lives and dies on the quality of its education," Sanders says.
"We know the educators are good educators, there are good providers out there, they've got the good resources, they've got really enthusiastic participants in the system, but we want them to become more than what they have been, and by the way I think they do as well.
"We have had some feedback from some educators and I say it has been overwhelmingly positive, but generally there are some educators who naturally enough are perhaps slightly anxious about this because it does mean they need to do something.
"They need to reposition their material, they need to perhaps start to remap the thinking away from only being RG146 to being bigger than just RG146. I want to be really very clear here, we're not talking about RG146 is no longer important, but our policy incorporates RG146 and identifies it as only one component, a single dimension of the things that we think are important and are not by any means the only topic."
The response from FPA members has been equally as positive, he says.
"This is an area of overwhelming enthusiasm where members have been screaming out for a richer more varied diet of education. A more nourishing diet than they have been exposed to," he says.
He says he expects the FPA will take at least the next 12 months to two years to really get the educational community, licensee environment and principal environment to respond to the new ideas.
For Pinnacle, the past 12 months have been spent rewriting its diploma of financial planning (DFP).
"We've re-released an entire diploma now and it's considerably beefed up from the old one. It's a big improvement in quality from the old DFP one," Prowse says.
"And in particular we've done a lot of work on the skills component. So now for a student to be successful they have to work on preparing SOAs (statements of advice) for example and convincing people they can explain advice clearly."
Feedback from the reworked diploma has been positive.
"So far it's really good. We held our breath a bit in taking this approach, because there's a lot of work in it and it actually does seem to be going over really well. We'll do a major review of it within six months," Prowse says.
The AFA has also been proactive in improving the quality for its members. The association has been developing a whole range of formal programs that address the skill issues as well as the strong emphasis it has had for a long time on peer-to-peer learning.
"It's quite clear that people learn from a whole bunch of different mediums and they learn form experienced practitioners and from peers and from case studies," Klipin says.
"I think advisers are looking for self-improvement and we've been in this prolonged calamitous bear market now for 15, 18 months and there's no end in sight, but if we look back at 2007 there was lots of innovation happening around the market.
"People in bull markets were honing their CVs and doing professional development and ongoing education obviously on the basis that the market was receptive to their skill sets and they were training up in terms of their roles and their salary levels and so on.
"I think in a bear market you've got the same kind of thinking, but it's in reverse in that there is already greater competition for roles, the better looking a CV and the more experienced and the more experience and knowledge that people have, the better position they have from a CV perspective."
As part of its push for greater quality for industry, the AFA has joined Kaplan, Association of Financial Services Educators (AFSE) and Growth Focus Financial Planning Recruitment (GFFPR).
Education survey
"We want to really get a feel for education and training expectations of financial planners and advisers on one hand and training managers on the other hand," Knight says.
"We're seeing those things happening in terms of our own experience, but we wanted to establish the level of qualifications we think organisations are going to look for from our planners and advisers and benchmark that against what the advisers themselves are thinking.
"We wanted to understand whether there was a gap between what the advisers were thinking as opposed to the training managers and companies themselves, and we also wanted to know whether people's current training needs are being met and how they want training delivered going forward."
The survey closed in early April, with the responses currently being correlated.
"We think it will give us a real overview of what the industry is doing in terms of securing competitive advantages. There is this real issue that there is a recognition that prior to the financial crisis there was going to be a talent shortage. I think people are still conscious that they want to keep the best ones," Knight says.
Academies
Another major innovation in the industry has been the birth of external advice academies.
A number of large institutionally-tied dealer groups and fund managers are linked to a handful of external academies.
For Sanders, the provision of professional education is a combination of all things.
"We think it's a combination of what your licensee will provide for you. We think it's a combination of what you yourself will source and identify as professional and how the profession will support you in that," he says.
"I do not believe, in fact I wholeheartedly disagree, with the proposition that all of your education should come to you from your licensee.
"So where licensees are providing education and opportunities, then we think that's a great idea, and we also encourage individuals to think about their own personal professional needs and they may not even be in financial planning.
"They may be about their own professional identities, their own professional needs, and that's what a profession should encourage."
The surge in interest in the academy model was triggered by AMP. The financial services giant launched its Horizons academy last year.
"We remain as committed to the ongoing evolution and development of the academy as the day we opened the doors on October 15," AMP Horizons Financial Planning Academy director Tim Steele says.
"As the market continues to move and as we see the results from our intake, we conduct a formal performance review at the end of every group and determine what we could have done better and based on that we make some changes.
"We've got the core of our program built. It's now more around the fringes that we're tinkering. But we intend to continue to make changes as we see needed."
He says the general feedback regarding the academy from the market is very positive.
"We're in the process of recruiting for our next intake, which starts on 4 May, and we've had over 1800 applicants, which again I think further validates for us that we've created a very clear and hopefully a very unique pathway for people to enter the profession," he says.
"I hope the industry recognises that we're making a significant commitment to the organic growth of planners and that can only benefit the broader industry long term in building the profile of financial planning to other professionals contemplating a career. Whether Horizons is the right path or whether the accessibility applies is another thing, but hopefully we're building the profile and continuing to act as a catalyst for this march towards professionalism."
For Knight, an academy like Horizons is an exiting initiative.
"The thing we think has real value in them is that they are trying to get people started at the grassroots level," he says.
"There's a bit of a recognition that those academies are seeing that people are going to take longer to perhaps get their careers moving so they are prepared to take some work experience, they're prepared to take these hard yards in the academies, take paraplanning roles, take lower level roles and progress."
Klipin agrees.
"Of the academies that I'm familiar with I think it's a rich part of the landscape because they are seating people, they are bringing them in, they are educating them.
We work closely with a number of these organisations and we think they are absolutely doing the right thing," he says.
"I think if you look at the landscape of education for financial advisers, the university sector is making a lot more impact in this market. That is a good thing because the rigor and the standards that comes with a university level education mean that you don't have to have a policy, but the minimum standard is lifting. Within the industry you've got a number of RTOs (registered training organisations) that provide very specific and tailored education needs for the advice market."
Sinclair also agrees the surge in academies exciting.
"I find them very exciting. Firstly they're not competition. They're not replacing qualification courses, they are part of the journey," he says.
"The best academies are the ones that don't stop at the four-week mark."
Other initiatives
Another avenue the industry has taken to boost its education offering and standards is through practice-level initiatives.
For Matrix Financial Planning-owned Collins Financial Group, formal and informal educational training is a vital part of its business model.
As well as undertaking informal training with the AFA and Million Dollar Round Table, Collins Financial Group has developed an in-house offering called the Pod system.
Collins Financial Group's adviser pods are made up of a senior financial adviser, who needs a minimum qualification of an advanced diploma in financial planning, a financial adviser, who needs to be a qualified authorised representative, and a trainee financial adviser or a financial assistant.
"Ultimately why we developed the pod model is that we have senior advisers in the firm who require support when meeting with clients, so we decided to get some younger trainee roles in place, but we don't want to throw the C class clients to them," Collins managing director and principal financial planner Troy Collins says.
"What they have is on-the-job training whereby there is always two advisers in every meeting [they attend].
"Once the client has proceeded with the strategy, then the financial adviser and adviser assistant manage the implementation of the strategy and the management of that relationship, so any communication from the client or from us comes predominantly from the financial adviser and adviser assistant because the senior financial adviser's role is to focus on not only developing centres of influence and referrals but also helping in the development of the company."
While clients were initially unsure about dealing with the pod system, they have become comfortable with the arrangement.
"It's taken some time for the clients to get used to it. We've been running it now for two years so the clients are quite comfortable with it," Collins says.
For Eureka Financial Group managing director Greg Cook, the group's licensee, Commonwealth Bank Australia-owned Financial Wisdom, provides a number of education options outside of the mainstream offerings. Among the options, Cook found the offer of mentoring and support through a business coach the most beneficial.
"The mentoring within Financial Wisdom is mainly through the peer groups that we have and also the business coaching," he says.
"Financial Wisdom have an offer to businesses like ours . we have a business coach we also have an advisory board for our business as well - I actually have one of my largest and longstanding clients is on my advisory board, as well as our business coach.
"We use our business coach to act in a mentoring capacity for the bigger direction of the business."
