Financial advisers need degree to gain public trust: expert

Noel Maye, chief executive of the Financial Planning Standards Board, says financial advice is not just for the wealthy.

An international leader in financial adviser training believes all financial planners will need to be qualified to a degree level in the future if they want to gain the public's trust.

Noel Maye, chief executive of the Financial Planning Standards Board - a worldwide organisation which oversees 150,000 advisers in 20 countries who have gained a the Certified Financial Planner qualification says a tertiary qualification is the hallmark to be recognised as a professional around the the world.

"At some point in the future when people are coming to meet with a financial planning professional they can expect that person to have a qualification to a tertiary level."

"The international financial planning community is supportive of that trend - moving towards a degree."

In some countries - like Australia and America - it is already a requirement for certified financial planners to have a degree, he said.

But in New Zealand where the financial adviser law is currently under review by the government there is no talk of making a degree a minimum standard for individual advisers.

Most advisers in New Zealand don't need any qualifications unless they give personalised advice where they have to gain a certificate level qualification to become an authorised financial adviser as well as undertaking ongoing training.

Of around 20,000 advisers in New Zealand only around 1835 can give personalised advice.

Of those 1835 a further 350 have gone a step further and gained the certified financial planner qualification.

The government is considering introducing either a minimum standard for all advisers or a principles based approach which would mean advisers have to be competent to provide the advice they are giving.

But it is cautious about setting the bar too high and has warned a downside of all advisers getting an individual license and meeting a minimum standard would be increasing the cost of business which would then be passed on to consumers.

Advisers are either paid by commissions or fees with fees ranging from around $250 for simple advice to $4000 for a comprehensive plan.

Research in New Zealand by the Commission for Financial Capability has found many Kiwis are put off getting financial advice because they are worried about the cost or getting conflicted advice.

But Maye down-played the cost issue and said advice was not just for the rich.

Nobody thinks that getting medical or legal advice is just for the wealthy.

Noel Maye

Maye said many people spent large sums of money on things they valued and it was not uncommon for people to spend $5000 on a holiday or even $20,000 on a wedding.

"Having a financial plan for your life - at what point do you put a value on that?

"A couple of thousand dollars to give you many years of happiness - that is probably cheap."

What is a Certified Financial Planner?
•a financial adviser trained to comprehensively look at the whole of a person's life who will ask what is important to you, what is your experience with money, where do you want to go in life and then ask about debt, tax, retirement and estate planning and come up with ways to help you meet your goals.
•they must pass an internationally recognised qualification that takes around one to two years to complete and must have at least three years experience to undertake it (or two years of experience under supervision.
•They must adhere to a code of ethics and undertake ongoing professional development to keep up with changes in the industry.
•In New Zealand 350 people are qualified certified financial planners out of around 1835 authorised financial advisers.