On January 1 last year the financial advice industry entered a new era when the first of a set of new education, professional and ethical standards came into force.
Between now and January 1, 2022, all existing advisers must sit and pass and exam; and by January 1, 2026, all existing advisers must attain a university degree or equivalent, or higher qualification.
And all advisers are already subject to new continuing professional development requirements, and an industry wide code of ethics.
It has been, and will continue to be, a disruptive period for the industry, as individual advisers commit the required time and resources to attaining the required qualifications, or possibly choose to leave the industry instead.
But will it be worthwhile? At the end of last year CoreData went out to consumers to ask them what they thought about the new standards. And the results suggest that the time, effort and cost may be well worth it.
Let’s imagine these dots represent the people who answered CoreData’s questions.
First, we asked them about the requirement for all new entrants to the industry to hold an approved university degree, and for all existing advisers to attain a university degree or equivalent, or higher qualification.
Half of the respondents said they’d trust advisers more as a result. Only 4 per cent said they’d trust advisers less.
Next, we asked them about the exam. Would advisers having to sit the exam make consumers trust advisers more?
Well over half – 55 per cent – said they’d trust advisers more. And only 2 per cent said they’d trust advisers less.
We asked them about the industry wide code of ethics.
Almost 60 per cent of them said their trust in advisers would increase if advisers were subject to a code of ethics. Only 2 per cent said they’d trust advisers less.
And then we asked them about advisers’ new CPD requirements
Around half of respondents said they’d trust advisers more, and only 2 per cent said they’d trust advisers less.
Even though most people haven’t even heard of FASEA, they like the sound of what it’s doing. When we asked them what they thought the package of FASEA reforms would do, as a whole, the response was striking.
Three-quarters of people said they would trust advisers more as a result of the FASEA reforms, and only 3 per cent said they’d trust advisers less.
Overall, the FASEA-led reforms are likely to have a significant effect on how much consumers trust financial advisers, and trust financial advice.
That’s a potential result well worth keeping sight of, as education, ethical and professional changes continue to roll through the industry.
