Education and Values

Professionalisation is a core thrust of all the changes envisaged in the financial services industry – from the introduction of FAIS to all current and future objectives.

What role will obtaining credits, a qualification or a degree play in ensuring this?

The original intent of the regulatory exams was to ensure that we understand the legal requirements (level 1) and had the required product knowledge (level 2). This would be followed by regular upskilling through continuous professional development.

The indefinite postponement of the level 2 REs created a vacuum in so far as upskilling is concerned, and, for the most, product development and training is still very much geared towards sales, rather than ensuring that we can assist clients in making informed decisions.

A recent article by Mark Nagle of Treysta Wealth Management in Australia highlighted a critical element which we dare not overlook in tackling education in the industry. He starts off with the following statement:

Raising professional standards is more complex than just mandating more education.

He lists a number of challenges facing the financial services industry in Australia. The following three apply equally to South Africa:

  • Reputation – our industry’s reputation continues to suffer under the weight of negative news stemming from poor advice practices
  • Raising standards – our industry needs to raise its standards or face further legislation to protect consumers
  • Adviser aspirations – to be considered “professionals”

One continuum in the debate is ‘Education’, along with a tacit assumption that increasing adviser education will translate directly to better advice outcomes for clients and therefore an improved reputation for the industry. And surely if all advisers are degree-qualified we’re more likely to be considered professionals, aren’t we?

The answer is way more complex than simply jumping on the “raising education standards” bandwagon.

I’m hearing plenty of noise around raising minimum standards of education for advisers, but surely there is a responsibility to include a structural review of what advisers are actually taught.

As US President Theodore Roosevelt said: “To educate a man in mind and not in morals is to educate a menace to society”.

In his article, Nagle acknowledges the absolute need for technical expertise, but then suggests the following:

Advisers need to be better equipped to deliver on the soft skills – understanding clients at an emotional level is significantly more valuable than being able to technically value a share, for example.

The current education programs tend to be supportive of the very issues and practices that have resulted in the call for higher levels of education in the first place – it’s paradoxical.

More enlightened advisers recognise the need to provide a value proposition that is somewhat removed from the more traditional approach of assembling a suite of products followed by an annual review.

These advisers are focused more around engagement, education, guidance and support for their clients. This demands a completely different skills set.

If the industry and its regulators really want to improve the way in which financial advisers serve their clients then we need to have a proper debate about expanding the very narrow and off-target adviser education that is prevalent at the moment.

They have an opportunity to engage with a new wave of advisers who are starting to do their job differently, the ones who are focusing on areas where they can make a genuine difference to their clients’ lives. At this time, there is a distinct lack of education that supports these advisers and that needs to change.

Nagle concludes this argument with a quote from C S Lewis: “Education without values, as useful as it is, seems rather to make man a more clever devil”.

Please click here to read the full article.

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