Building a better financial advice industry
Education and professionalism are the key to building trust in the financial advice industry and attracting more people to the industry, which would mean more consumers would get advice, Amelia Constantinidis writes.
One of the great benefits of my job is that I get to hear many positive stories of how good financial advice has made a real difference in improving people's lives.
I hear how it provides financial peace of mind; how it helps individuals and couples realise the lifestyles they aspire to lead in later life; how it helps people plan for and navigate through challenging periods in their lives; and how it promotes valuable financial disciplines, which parents can pass on to their children.
But only 20 per cent of Australians currently seek financial advice.
This low number reflects the fact that our industry needs to do more to educate the broader Australian community of the benefits of seeking financial advice. In light of some negative publicity the industry has received in recent years, it also suggests we need to re-build consumer trust.
Restoring confidence to help industry grow
We want to see the number of Australians who seek financial advice increase because we know that people who seek financial advice get better financial outcomes.
Planning for a better tomorrow requires access to quality advice and as a profession, there is a significant opportunity for us to make financial advice available to more Australians — our success will be evident in providing more advice to more people.
To achieve this, we need to continue growing the financial planning profession in Australia. We know current adviser numbers cannot realistically service the full potential of the market, which is why we need to invest in the growth and development of the industry — this is good for Australia and good for Australians.
While it is important we help the industry to grow, it is also imperative we work to increase confidence in financial planning as this will inevitably be the key driver of the sector's growth. That growth will lead to increased demand for financial advisers.
A recent example is the launch of a broad-ranging ethics and responsible decision-making program by the Ethics Centre in August this year. The program, designed in conjunction with AMP, is available industry-wide and provides participants with the opportunity to build further knowledge and skills in making informed, ethical decisions and building better relationships with customers and colleagues.
This is just one step in helping to restore trust in the financial planning profession and the majority of advisers I speak to agree that the process of getting more Australians to seek advice begins with increasing the professionalism and education of the industry.
Education for a credible reputation
Many in the industry have recently announced minimum education standards for their financial advisers.
By requiring financial advisers to hold post graduate level education we are ensuring the highest standards of professionalism and education. And customers of financial advice deserve nothing less.
If we want financial advisers to sit alongside other professions like lawyers and accountants, and we do, we believe this move will help improve perceptions of the financial planning profession and restore consumer confidence in our industry.
We are now focused on helping our advisers decide on the best pathway for them — whether it be a Certified Financial Planner (CFP), Fellow Chartered Financial Practitioner (FChFP) or Masters of Financial Planning (MoFP).
In some cases, we are hearing that financial advisers who already have a CFP are considering how they can take the next step to increase their qualifications. It is an indication that many advisers see the value of increasing education standards and professionalism in the industry.
Access to quality education for those starting a career in financial advice is important for the future prosperity of the industry. But we also know that the majority of people considering a career in financial advice are moving from another career so the industry needs to support flexible study options that allow people to continue working.
As an example, AMP recently announced changes to its Horizons program delivered in partnership with Griffith University, which includes the introduction of more flexible study options and an increased amount of time working in a financial planning practice to build knowledge and skills.
We firmly believe that financial advisers should achieve high standards of education, but along with academic training, practical experience goes a long way towards shaping the kind of financial adviser that will deliver advice that changes people's lives for the better.
Ultimately, the goal for the industry is to increase the number of financial advisers so we can ensure all Australians have access to quality financial advice. Looking back over the past five years, AMP Horizons has helped us to bring more than 100 graduates into the profession every year and we are working to ensure the development of quality graduates continues.
However, we also need to consider how we make a career in financial advice compelling for more Australians. This includes finding ways to improve flexibility for people who want to study to become a financial adviser. The result is that we'll open the opportunity to start a financial planning career to more Australians.
The customer must remain at the centre
The world is changing, with technology improving and influencing the way that individuals want to interact with financial advisers.
Despite this change, we must never lose sight of the fact that the customer must be at the very centre of everything we do.
One of the challenges within this is to better articulate the value of financial advice and how financial advisers can make a significant difference in people's lives. Increasing levels of financial advice in Australia would not only be good for the economy but would help individuals reach their goals and aspirations.
Our goal is to lead the way in improving the quality and standing of financial advice in Australia — to improve outcomes for the Australian community and our customers.
We in the industry know the positive impact good advice can have for Australians. Having control over their money gives individuals much more than peace and security — it gives them a greater chance to fulfil their dreams and aspirations.
Amelia Constantinidis is the head of advice recruitment and professional development at AMP.
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