A professor friend recently shared some commentaries on the financial services industry prepared by fourth-year personal finance students for an assignment. What’s shocking is how deadly accurate they are and how few prospects they see for industry change unless it is mandated.

Here are some of their observations:

> Education For Financial Advisors. One of the students expressed skepticism about the assertion that higher education will provide financial advi-sors with the knowledge needed to provide impartial, unbiased advice to clients. The student noted that courses on investments and investing overwhelmingly focus on ways to actively select and manage securities and very little time is spent on passive investing strategies or the merits of passive investing.

> Curriculum Is Skewed. One student observed that most universities and colleges design their business courses and programs to enable students to obtain specific designations. The course material is no longer general and all-encompassing. Instead, course content consists almost exclusively of material relevant to the designations.

The student questioned the impartiality of the education being provided and observed that it is skewed in its focus and weighted to the very industry practices that give rise to conflicts of interest between clients and their financial advisors/financial services providers.

In a troubling observation, the student added that university and college courses are reflections of the status quo, with little to differentiate them from the courses being offered by industry certification programs. One expects more from a university/college education.

> Lack Of Focus On Ethics And Governance. Another student said more exposure to the recognition of ethical dilemmas and their resolution is required. The student said this is essential for people who will be dealing with other people’s money, particularly regarding their compensation structure.

This student favours a fee-only environment: “I have always thought it impossible to have the client’s interest foremost if you are being pressured to meet sales levels and maintain book value levels.”

> Unbundling And Full Disclosure. According to one student, financial advisors will be the group that suffers the most from changes involving the unbundling and disclosure of fees and charges because the current system does not value the services financial advisors provide and the average consumer is unlikely to pay for advice.

The student said consumers will not tolerate trailer fees and higher MERs once they know about them, and will advocate for alternatives that reduce or eliminate these fees.

What is needed, according to this student, is a restructuring of the industry that would see financial advisors establish themselves as independent, full-service wealth-management advisors. However, the student thinks this is unlikely to happen unless the restructuring is forced by regulatory or legal action.

Meanwhile, another class of students is about to enter the workforce, and the reality is: if these graduates want to work in our industry, they have little choice but to accept the status quo. Hopefully, some will remember their undergraduate views and become advocates for change.

Of all the issues raised, one of the most serious is the shortcomings of education programs. These shortcomings are something governments, regulators and the industry need to do something about. And regulators need to remember their responsibility for overseeing the adequacy of industry education and training. IE