'Soft skills' training and psychology are relevant to FOFA's best interests duty and should be taught if the industry is to become a profession, says one leading educator.
Training variation is one of the biggest problems in the financial services industry and is impacting the take-up of soft skills, Griffith University associate professor (Finance) Mark Brimble told InvestorDaily's sister publication ifa.
“If the planner does have… knowledge of these behavioural biases and how they can impact on the conversations they have with their clients, then that should lead to a stronger relationship over time and that should be manifesting itself in more appropriate advice,” Dr Brimble said.
“Effectively what we’re saying is that part of the training should be to pick up on some of these theories and strategies so that it becomes part of the planner’s skills set and knowledge on how to best engage with clients.”
However, given the complexities around behavioural issues, Dr Brimble said the variable training standard in the industry is too low and is affecting the quality of advice.
The Australian Securities and Investments Commission recently released Consultation Paper 212 on RG146 which included the requirement that advisers be “aware of potential behavioural biases (both in themselves and in their clients)”.
Dr Brimble said while this is a good start, he questioned the depth in which it can be covered under RG146.
“I think when you’re talking at the lower end of the minimum standards then a lot of these higher order skills like the behavioural finance naturally can’t be covered in a three-week training course where you’ve also got to cover the basis of finance,” Dr Brimble said.
“And of course that will only pick up the new entrants rather than the existing industry advisers who are already out there.”
Dr Brimble said the industry needs to address the discrepancy in training to ensure clients have trust in financial services.
“One of the biggest problems we have in financial planning as an industry is the variations out there: so you’ve got everything from someone who has done a two-week training course with very little experience through to people who have done degrees and have years of experience,” Dr Brimble said.
“This is where the interplay between the professionalisation of financial advice, the expectations and the complexity around behavioural issues really comes into being.
“The industry, in my view, really needs to get its act together… and actually agree on what minimum standards of entry into this industry should be given.”
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