Risk and life insurance advice is “not that complicated” and a tertiary degree is not needed in order to give quality advice, argues South Australian financial planning firm Enva.
Responding to the interim Trowbridge report via a submission to the Life Insurance and Advice Working Group (LIAWG), the Charter Financial Planning authorised representative said a requirement for a degree in advice is “simply overkill.
“Insurance advice in particular is simply not that complicated. Neither is the vast majority of investment and retirement planning advice,” the submission said. “The position is primarily a relationship manager using the resources and research of dedicated specialists.
“A similar comparison would be requiring that stock brokers have a masters in finance and that loan brokers have a bachelor in commerce, or real estate agents having a degree in property construction and valuation.”
Advisers do not need to know all the answers; they just need to know where to find them, the submission said.
Enva also highlighted there is an “unhealthy conflict” caused by the licensing system.
“AFSL holders have a financial incentive to cover up poor advice and provide support to advisers who struggle with compliance,” the submission said.
“The best way to improve quality of advice is to start by requiring advisers to hold a membership with a professional body and if they are exited from that professional body or suspended from it, they should not be able to practice.
“This should be the first step along a path that shifts the licence status away from product manufactures to professional bodies – one the FPA and another the AFA,” it said.
“These professional bodies should then take over compliance and oversight capabilities,” the submission said.
The LIAWG is due to hand down its financial report at the end of March 2015.