Trip of a lifetime

Warren Jacobson

Deen Sanders

When it comes to education for financial planners these days, it’s a bit like buying a ticket for a trip that never ends.

Although much of the recent discussion in the education market has focused on growing sector consolidation after Kaplan’sacquisition of Tribeca and the Finsia education business, the real shift is occurring at a more fundamental level.

It’s goodbye compliance and hello lifetime learning.

Far from being an annoying impost introduced by the Financial Services Reform (FSR) regime, ongoing professional education looks set to become a key part of a planner’s annual activities.

Perhaps just as the Australian Securities and Investments Commission (ASIC) intended, there is now much greater emphasis on planner education at all levels, with attitudes shifting from a focus on mere compliance to education solutions being viewed as a way to add real value.

Market consolidation

This growing interest is likely to have been a factor in the decision by Kaplan to shake up the Australian market.

According to Kaplan managing director Warren Jacobson, acquisition of the Tribeca and Finsia businesses creates a valuable opportunity, as “the businesses were far more complementary than competitive”.

“With consolidation, there is a greater capacity for us to provide a cradle-to-grave solution.”

Jacobson believes Finsia’s strength in the postgraduate area dovetails neatly with Tribeca’s strength in vocational education and professional development. He said this “brings together both ends” of planner education and “creates a very compelling offer”.

Consolidation in the education market also reflects changes in the wider financial services industry.

Jacobson said Kaplan’s diverse education offerings mirror the variety of products and services offered by its clients.

“We are finding the lines more and more blurred,” he explained.

“The deals reflect what the industry is doing itself.”

John Prowse, managing director of Pinnacle Financial Services Academy, is positive about the market moves.

“In terms of Kaplan, I think it is a good thing they have arrived in the country, especially in the tertiary sector.”

However, he does have some concerns about market domination by one provider.

“It is nice to have variety and choice,” Prowse said. “I do not think single, dominant players are a good thing in any industry.”

In fact, Jacobson believes the Kaplan acquisitions could make the market more competitive.

“I am certain two or three new providers of vocational education will, or have, emerged,” he noted.

“The market from my perspective is no less competitive than ever before. In fact, some of the smaller players see this as an opportunity and we need to be conscious of that.”

Shifting attitudes

While the industry is mostly upbeat about the changes, some experts are focusing their attention elsewhere.

“The consolidation of providers is not as significant as people think,” Financial Planning Association (FPA) general manager of professional standards, CFP and education Deen Sanders said.

“The FPA is more interested in quality.”

Although the existing providers engage in “robust competition”, Sanders is somewhat critical of current offerings.

“The education that has been offered could do more to meet planners’ needs,” he said.

“There has been a fair bit of short-termism in the education market.”

Sanders believes the key to the success or otherwise of the current consolidation phase will be in the quality of offerings provided.

“The important thing is the quality and how well providers meet the needs of the client market.”

In fact, the FPA plans to become far more vocal in relation to planner education.

“The FPA is interested in influencing the market,” Sanders said.

“We want to influence it towards higher standards and richer, broader programs. They need to be at a deeper level.

“The FPA is concerned much of the education is focused on product, or at the Diploma of Financial Services level.”

He believes there is not the necessary breadth of programs.

“The FPA wants to encourage the market to respond appropriately.”

Sanders said the FPA will be making several announcements in the fourth quarter to provide “greater guidance to the education market” and will also articulate what it considers to be ‘good’ continuing professional development (CPD).

Goodbye compliance

While there is lots of talk about new education offerings, the most noticeable theme is the view that the days of education and CPD based purely on compliance requirements are over.

“More than ever there is recognition that continuing education is an important part of career development,” Jacobson said.

“There is a move away from a compliance mentality and that is a positive for the industry, clients and education providers.”

Sanders agrees attitudes are changing.

“The problem with education is that it has had a compliance approach because that is what people wanted to buy,” he said.

“The industry has been digesting its compliance obligations and it is now moving on.”

While acknowledging some planners retain a negative attitude towards ongoing learning and see it as a chore, Association of Financial Services Educators president Sue Hamparsum believes most are starting to recognise the benefits.

“Some begrudge it, but others see it as benefiting themselves and their clients,” she said.

This shift in attitude fits neatly with Kaplan’s desired business strategy.

“We have a strong preference to be seen to be adding value rather than being a provider of compliance-based solutions,” Jacobson explained.

Hamparsum believes planners are recognising that ongoing education is not going away.

“The challenge is to engage them as learners,” she said.

“If they’re a financial planner they need to accept that they are always going to need to update their knowledge and learning. It’s a life sentence.”

Hamparsum believes a learning culture is beginning to take root.

“We need to create a mentality of ‘forever learning’, and that is slowly starting to happen. It’s a cultural change.”

Organisations such as Bridges Financial Services have embraced this learning culture concept, according to national training and development manager Stephen Hunt.

As a principal member of the FPA, Bridges planners must hold the Advanced Diploma of Financial Services or complete it within two years of joining the organisation, and they are also expected to move towards Certified Financial Planner status where possible.

Too much education?

Despite the positives flowing from PS 146, Prowse argues there are also traps for the industry.

“There are dangers in misunderstanding that higher levels of qualifications equal quality,” he said.

“Some people argue that everyone needs a university degree, but that is unnecessary in many cases.”

Prowse said most industries end up developing two-tier qualification structures to service different client needs.

He argues not every planner can service the top-end of the market where complex solutions and significant technical expertise are required.

“What most people need help with are problems relating to budgeting and debt management advice,” Prowse said.

“This means what is needed is commonsense, practical skills and people without higher income aspirations.”

Sanders sees it differently.

“We are not seeing the range of programs as being too high. We would love to see that happen,” he noted.

“At the moment the market is not seeing all the programs needed.”

The FPA is eager to encourage the development of broader offerings that meet the needs of an evolving market, Sanders said.

“The education market has been a static market and has not done enough changing, but now we have reached a new point in the cycle.”

CPD criticisms

While there is some divergence of views, attitudes towards CPD are more uniform, with most experts critical of the current approach.

“CPD is the lifeblood of a profession,” Sanders argues.

“It shouldn’t be a mandatory pill-taking exercise to inoculate you for compliance every 12 months.”

He believes under the current approach CPD is about “the currency of compliance and not about exciting and interesting professional development”.

Jacobson agrees CPD should be more than mere compliance.

“There is an increasing recognition that continuing education has the capacity to add competitive advantage.”

For Prowse, the current approach to CPD places far too much emphasis on points and hours completed, rather than ongoing training in all content areas.

“There is no attempt to track content after the original qualification,” he noted.

“Points and hours are a very primitive way to give comfort to consumers.”

The holders of other technically demanding roles such as pilots must demonstrate their competence in all areas annually.

“They need to re-validate all components in all areas. Technology makes it simple to do and it should be the same for planners. They should need periodic evidence they have retained their competencies,” Prowse said.

According to Hunt, Bridges sees the PS 146 requirements as the minimum standard for its planners.

“When we set training plans we follow the FPA in terms of guidance.”

His planners have personalised training plans tailored to match the ASIC knowledge areas and they incorporate reading, skills courses and mentoring.

There is also criticism of the one-size-fits-all approach to CPD.

“There is an argument that the quantity of CPD should be different for different people,” Prowse said.

“If you are doing a non-technical job then you don’t need highly technical CPD training.”

He believes the relevance of the CPD to the work the planner is undertaking is the key issue.

Gaps in the market

As the move towards a learning culture gains strength, Hamparsum believes planners are increasingly interested in new areas.

“The industry is becoming very thirsty for knowledge, and [for] new ideas and strategies in particular,” she noted.

Sanders believes there is plenty of room for fresh offerings, particularly in processes such as risk analysis and client engagement.

He also sees gaps in training on pro bono support, philanthropy, complex investment structures and specialist areas of life insurance and superannuation.

“One education program cannot meet all the education needs of the industry. It needs to be wider and deeper than that,” he said.

Jacobson agrees.

“With the compression in time between being in a classroom and then in front of clients, we are finding increasing recognition of the need for specialist courses,” he said.

“There is a clear recognition you need to go beyond technical competencies and invest in courses that contribute to ‘soft skills’ development. And this needs to be supplemented by internal support and mentorship.”

Hamparsum also believes soft skills are a growing interest area.

“The technical knowledge box is ticked and now we have fabulously technically-apt people, but they are not good at layman’s explanations of technical issues and relating to clients. Those skills are often lacking.”

She believes dealer groups are well aware of the problems in client communication.

“Many companies recognise the lack of soft skills and are incorporating it into their PD [professional development] days or their relationship skills training,” Hamparsum said.

“Some companies are recognising even experienced advisers can need help to learn soft skills.”

Hunt said mentoring and utilising the in-depth knowledge and skills of senior planners is a vital part of the education approach at Bridges. This expertise is utilised during both induction and ongoing training programs.

“We see soft skills as an important facet of training for an adviser,” he explained.

Prowse agrees communication skills are vital.

“A planner needs good soft skills, as getting compliance is very important. It [financial planning] is mostly about getting people to discipline themselves.

“No training course can offer full training to make someone a complete financial planner,” he said.

Practice management is another area where new offerings are required, Hamparsum said.

“People are looking for skills such as marketing, developing a compliance culture in a business, how to run a business well and succession planning for both the planner and clients.”

The future

Despite all the changes, planner education looks like it may still have some more to digest.

Prowse believes in the future, financial services education could develop into “two tiers, with greater respect for the diploma education level”.

“What’s needed are practical, well-trained people with reasonable income expectations. We need well-rounded financial planners rather than highly technically skilled planners.”

From Hamparsum’s perspective, the future will be about leveraging whatever education planners do undertake.

“The majority of organisations think, ‘We have invested so much in training, so why not embrace it and look at how we can learn more and take advantage of that training time and investment’,” she explained.

“Most are trying to work out how it can benefit their business. They believe if their staff learn more they can do more.”

Jacobson agrees there is a growing mood to use the resources devoted to education to benefit the business, particularly in relation to staffing.

“We are noticing in our client base a greater interest around using education as an attraction and retention tool,” he said.

“There is increasing recognition that education is valuable and the challenge is for organisations to develop offers that go beyond mere compliance tools.”