Degree qualification not the only road to consumer trust

by Maya Breen12 Mar 2016
Mortgage Link managing director Josh Bronkhorst told NZ Adviser formal qualifications would be beneficial and establish the financial services industry as a trustworthy one but there are other factors at play.

“I do believe that working towards a degree qualification long-term is a good thing,” says Bronkhorst. “However I don’t believe that that is the primary reason why consumers are not seeking advice.”

“The industry as a whole in the last few years has suffered a bit of a blow in terms of the whole perception from a consumer perspective. Also I don’t think consumers fully understand what advisers do or can do for them.” 

Bronkhorst says if advisers take a long term approach with a client they are more likely to develop trust between them and the longer they deal with a client the more their trust develops.

Historically, advisers have taken a somewhat ‘silo approach’ to advising, he says, focusing on single-need selling rather than taking a holistic approach and a focus of the company currently is in broadening the offering so one touch point with the client can lead to further interaction with different specialists about finance, insurance and Kiwisaver. 

“You’re far more likely to get a consistent approach across information that’s collected and advice that’s provided.”

Noel Maye, chief executive of the Financial Planning Standards Board - a worldwide organisation which oversees 150,000 advisers in 20 countries, recently told NZ Herald a tertiary qualification is the hallmark to be recognised as a professional around 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," said Maye.

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

And a survey of more than 1,750 users by website Sorted revealed the top five reasons Kiwis avoid advice, with trust issues ranking as one of them and comments including, "I'm concerned they would direct me to organisations that would benefit them rather than me." 

The other four reasons were preferring to do it themselves; thinking advice was out of their budget and only for the super-rich; not knowing where to start; or not thinking it was worth it.
 

COMMENTS

  • by Nigel Tate 14/03/2016 11:21:17 a.m.

    Whilst I agree with Josh with regard to qualifications (or the lack thereof) not being the primary reasons for any perceived lack of trust, I support the view that eventually a tertiary level qualification will help consumers with their level of respect for and confidence in a financial profession and professional.

    Given the majority of the breaches of trust to date have come from Accountants and/or Lawyers, each of which require a degree qualification to practice, this cannot be the only issue. Much of what is required is common decency in the way we deal with long term clients, know our stuff and do our stuff efficiently and in a timely manner.

    The future of the financial planning/advisory world is heading toward degree qualifications as a prerequisite to practicing and that can only be a positive thing but will not in and of itself award any undue consumer trust, that will take time and diligence on the part of those of us already practicing. Professional designations awarded by reputable professional bodies or organisations along with on going professional development will provide further recognition of a professionals worth and trust worthiness.

    There are also other elements to building a sound base for a professional such as the communication skills and soft skills of getting to know your clients and what drives them and their wants, needs and desires.

  • by Mark 13/05/2016 11:32:08 p.m.

    I've some experience of this issue from the UK.

    I think it's important for people to have a good grasp of the topics they are advising people on, as there is usually danger in the details. Examinations help build this knowledge in a concentrated fashion and provide the proof to the world.

    That being said, I have taken some exams that are essentially worthless for the real world and helping clients.

    I often find that I need to read a wide range of material on top of the exams to have the correct amount of understanding on each subject. I find the exam formats only ever give you a snapshot of each topic - all condensed into poorly laid out textbooks (at least that's my experience).

    High skill is one thing, but human behaviour is another. Incentives play a large part and there are still far too many who view terms such as 'do the right thing', 'treat customers fairly' and 'fiduciary capacity' etc. as box ticking regulatory terms, not the foundation of a client relationship and their business.

    High qualifications won't solve the problems with poor advice/shoddy sales and the resultant lack of trust.

    I've come across a chartered adviser in the uk (masters level), who after being informed of the many valid reasons of why he shouldn't move a tiny investment (I believe it was only £20,000 or so), responded with 'we need to move it so I can get paid'. I ended my contract with that firm, he no doubt put through the business (this was in 2015).

    When I first started out about 8 years ago now, many in the UK only had certificate level qualifications (college level I believe).

    My old boss used to set up pensions for his clients children and grandchildren as a free service because he understood the value of compound interest and time. I wonder how many people he will never meet who will be greatly helped by that advice and service.

    Ironically I witnessed this at the same time as many were pushing for higher level qualifications and depicting all advisers as ignorant and self-interested.

    So whilst higher qualifications will help, there are many other factors to improving advisory standards, and then it will take a long time for trust to grow.

    Finally, the very nature of providing financial advice is always going to create some amount of mistrust. It's related to the combination of the future and money - The future is unpredictable and not many really understand anything to do with money, let alone financial products, terms and structures.

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