Research finds changes to financial advice sector will rebuild public trust
Research from Western Sydney University has found Federal Government legislation to professionalise the financial advice sector in Australia will help restore confidence in the beleaguered sector.
With the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 being passed through the Senate this week, financial advisers will be required by law to hold a bachelor's degree or higher in order to provide financial advice.
The changes will also introduce an industry code of ethics and require advisers to complete a 'professional year' of work experience, similar to the requirements of professional accountants.
Dr Michelle Cull, lecturer in financial planning at Western Sydney University, says her research showed that clients were more likely to trust financial advisers who held degree qualifications.
Findings also indicated that clients who knew the qualifications of their adviser ranked their adviser's competence-based skills higher than those who did not.
Clients who found advisers to be untrustworthy expressed the view that advisers did not have a sufficient level of qualifications.
Dr Cull says her research found that only half of existing financial advisers who participated in her research on trust in financial planning held a bachelor degree or higher.
"Our research suggests that enrolments in financial planning courses will significantly increase once the legislation becomes law," she says.
"For existing advisers who choose to undertake their study part-time, they will need to ensure they are enrolled in a bachelor degree by 2018 to ensure they have completed their qualification by 2024."
"We know that only 1 in 5 Australians currently seek financial advice. This new legislation will help improve the level of trust that Australians have in financial advisers and give them the confidence to seek financial advice to assist in meeting their life goals."
Find out more about Western Sydney University's Postgraduate degrees in Financial Planning.
10 February 2017
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