There could be a slight exodus of financial advisers in the short-to-medium term in light of the new professional standards, and the impact of the global financial crisis on financial advice businesses, as well as a lag in seeing new advisers enter through the new minimum educational entry standards.
That was the opinion expressed at a media luncheon by the Association of Financial Advisers’ (AFA) chief executive, Brad Fox, who said some advisers would exit because their businesses had failed to hit their revenue and profit target as the Australian Securities Exchange (ASX) had failed to recover lost ground.
He also said the discussions around educational standards failed to consider broadening the knowledge bases in the courses away from the staples like superannuation, investment, the workings of the capital markets and estate planning.
“We need to train them on psychology, we need to train them on decision-making biases, and we need to train them on persuasion, coaching,” Fox said.
“The greatest difference you make as a financial adviser is helping people make smart choices but ultimately adopting or changing their behaviour to honour the new choice that they have made. You don’t tell them what to do, you educate them; they choose.”
Fox also said a fresh graduate would not have the emotional intelligence or EQ of an experienced adviser but this was something that could be developed with education and training.
On the issue of robo-advice and fintech, Fox said technology would play into financial advice in two broad ways.
“One is as an herbivore, which is to help advisers in their productivity and efficiency, help advisers with their jobs, and [the other is] carnivores, those that will eat the financial advisers’ market share; they’re going to compete, they’re going to disrupt. They’re both going to exist.”
But he emphasised the role of advisers would not diminish as clients would still need face-to-face human interaction for complex issues, coaching, and the emotional intelligence.
Fox also said the AFA was focusing on long-term relevance of five and 10 years to steer discussions around policy, resource allocation, and attracting graduates to financial advice.
