Learn New Tricks: FASEA Improves Part of the Journey
Tony Gillett of Retirewell
The code of ethics for financial advisers is not intended to spot bad players and add layers of new conditions, said June Smith, deputy chief ombudsman for the Australian Financial Complaints Authority (AFCA).
“I don’t see ethics that way at all,” Smith says in episode 3 of Professional planner Ethics for advisors Podcast.
âWe’re in the business of human relations, human relations, so how this profession and each counselor will engage and interact with people when they are dealing with their issues is crucial.
âOn some level, the new occupational standards currently being implemented were designed to raise standards and clarify, but if this is our only frame of reference, we might be missing out on a real opportunity. “
Smith says there are three sets of values ââthat drive planners to make good decisions – moral worth, corporate values, and the corporate culture of the organization in which they work.
She says financial planners play a positive and essential role in providing much needed services to Australians and that these new principles, accepted by all members of the profession, are enhancing the reputation of the industry.
Retirewell’s director of financial planning Tony Gillett, a 23-year industry veteran, says financial planners are on the hardest part of the road to professionalism.
âWe all have to take the Financial Adviser Standards and Ethics Authority (FASEA) exam and the way the process was approached has been a bit rough, especially for older members of our emerging profession,â said Gillett. .
âMy big concern is that there won’t be enough trained, good and experienced people to mentor. “
He says that the introduction of the FASEA code of ethics was “the best thing that has happened to this industry.”
âThe Financial Planners Association did a really good job in the 90s and established the first code of ethics, but unfortunately not everyone was a member of this body,â he says. âNow we have a code that applies to everyone and that is at the heart of everything we do and how we act as financial planners.
âTaking the exam got everyone involved and studying a lot more and realizing that this is a very essential step along the way. “
Gillett says the review and the new code forced him to think about the moral and ethical issues all planners face.
âI was skeptical, but now I think you can train a person to give advice in an ethical framework,â he says. âYou can teach an old dog new tricks and I think we have to.
âI believe that all the authoritative compliance obligations that we are forced to meetâ¦ are part of the journey.
Gillett says bringing industry closer to a profession will help if the Australian Law Reform Commission recommends removing Chapter Seven from the Companies Act and everyone working towards higher education degrees.
âWhen we get to the point that everyone has a degree or the equivalent, then we’ll be a recognized profession,â he says, adding that there are âthree to five yearsâ left in the industry.
âWhen we get to this point and are recognized as professionals, much of this excessive compliance will disappear or be reduced. “
Smith says the number of complaints against financial planners coming to AFCA was decreasing and mistakes were made, but no one was able to reduce the complaints to zero.
âMost of the time at AFCA, what we really see are issues related to the culture of the licensee. These are business models and one size fits all, âsays Smith.
The FASEA code talks about the context of the business for which advisors work and a culture that will serve clients first. Smith says there are changes in the industry’s intergenerational approaches and the way advisors do business.
âIf you put a good person in a good company culture, you will get good results,â she says.
The opposite is a person who cannot reason through an ethical dilemma in the wrong culture.
âEven people with good moral compasses face moral hazard and the values ââjust don’t match or may be tricked into doing the wrong things,â says Smith. âThe factors that will influence this are the culture, the ethical leadership within this organization. “
Value-based businesses actually make money, she explained, and that’s not a trade-off between profit and good.
âIt’s about leveraging a customer’s value proposition anchored in the value of customer service first and generating profits that way. “