The labelling of financial advisers as ‘experienced’ or ‘relevant’ providers based on their education should be dropped to avoid consumer confusion with the distinction moved to marketing and advice documents provided to those seeking advice, according to The Advisers Association (TAA).
TAA chief executive Neil McDonald acknowledged the main concerns of consumers was to know if a financial adviser was suitably qualified, competent and trustworthy.
“We think using terms like ‘experienced provider’ and ‘relevant provider’ just creates deeper consumer confusion,” McDonald said.
“The differences between these two providers are not immediately clear and will have to be explained.
“There’s also the risk that people will think ‘experienced’ is somehow better than ‘relevant’. It certainly looks like that at first glance.
“The difference between an experienced adviser and a relevant adviser could then be simply addressed at the consumer level, for example, adviser qualifications or lack thereof, and experience, could be contained in the Financial Services Guide and marketing materials.”
McDonald revealed the TAA has put forward this case in its submission to the Treasury consultation on ”Education Standards for Experienced Financial Advisers and Technical Fixes for New Entrants” in which it stipulated the current education regime had created the need to identify the education background of advisers.
“We must have an experienced pathway because in order to fulfil consumer demand for advice, we have to do something to stem the exit of highly experienced advisers from the profession,” he said.
“But are we over-complicating it? If we stand on the outside for a moment and look in, consumers must be wondering what is so difficult.
“We’re sure many consumers still don’t know what qualifications financial advisers must hold and, if they do, they are likely scratching their heads as to why there has so far been such a one-size-fits-all approach to adviser education.
“They’re likely also wondering why prior learning and a broader range of relevant qualifications are not better recognised, particularly for those wanting to enter the profession from closely-related professions,” he concluded.