Responding to the government’s draft legislation – which states prior learning will be measured by the types of courses that advisers have completed – the AFA said that considering years of experience in lieu of degrees could prevent many advisers from retiring early.
“Older, experienced advisers who are already recognised with a strong and untarnished track record of giving quality advice, who have abided by professional association codes, and who have shown a long-term commitment to keeping their professional development current, should not be subject to unnecessary red-tape to re-validate their competence,” the association said.
“Whilst in their later years as a practising adviser, the prospect of facing considerable time, cost and the stress of completing new degree-equivalent courses and doing an examination that is not reflective of operating in the advice environment, will drive a significant number of quality advisers to consider earlier retirement.
“The prospect of thousands of quality, experienced advisers exiting early over the next 3 years is an extremely concerning consequence of the proposed framework if it is implemented without changes being made,” the AFA said.
The AFA recommends the minimum qualification level for experienced advisers with clean records be set at AQF6, in line with the Advanced Diploma of Financial Planning. The association also suggested exempting specialised advisers from comprehensive assessment requirements that “would not be relevant for giving advice in their specialist area”.
In addition, the independent standards-setting body, which will begin operating on 1 July 2016, should include at least one director with recent practitioner experience in a small advice practice, the AFA said.
“The impact of these changes will be felt greatest within the ranks of small business advisory practices,” the association said.
Also raising concerns about the draft is the Association of Superannuation Funds of Australia (ASFA), which said in its submission that two years is not enough time for existing advisers to become degree-qualified.
“Noting that under the Australian Qualifications Framework the volume of learning (assuming full-time study) for a level 7 bachelor degree is three to four years, there does not seem to be adequate time for advisers to become qualified,” ASFA said.
“We submit the commencement date for requiring the relevant qualification be moved out to three years after the date the standards body approves the qualifications.”
[quote name=”Andrew Powell”]If an adviser has a Bachelor of Science degree with majors in Physics and Pure Mathematics and a minor in psychology and 25 years experience does that meet the new standards?.[/quote]
THE DRAFT legislation DOES NOT.,
If an adviser has a Bachelor of Science degree with majors in Physics and Pure Mathematics and a minor in psychology and 25 years experience does that meet the new standards?.
Honestly AFA, arguing that there should be exemptions for some makes you as bad as the FPA and their ‘grandfathered’ CFPs. By all means, ask for an extension to the timeframe, I can see reason in that.
But ‘how many years’ is going to be the cut off point? Are my 10 years of experience good enough for an exemption but my colleague’s 8 years not enough?
As Sam rightly pointed out below, this has been discussed in our industry for quite some time, long enough that I went off and studied part time to get myself a degree. And to my surprise, I found it interesting, enjoyable, and I even learned new things that I now employ in my practice. I don’t think we should ever be live that there isn’t something new to learn and that we are already in possession of every scrap of knowledge and capability we need to be good at what we do. How limiting!
So to quote Nike: just do it!
I somewhat agree with what people are saying as to ‘the main part of being a good adviser is doing right by the client and that doesn’t require a degree’…
I do however think the financial planning industry has (and still does somewhat) attract those who do not put the client first just because the entry barriers are low.
If a degree requirement is the minimum for entry there aren’t going to be too many people that go to uni for 3+ years to enter a profession they aren’t passionate about and do the wrong thing making the rest of us look bad like some do now…
Sadly the graduates that we have employed lack one essential characteristic – the care factor. We are a service profession – give me an adviser that cares over a graduate with a bad attitude anyday. I have two degrees so I do not have a vested interest in arguing the case for our experienced colleagues with a proven track record in serving their clients.
Sorry, but you have that a little wrong. Past FP qual’s are very similar to the current modules. Its the business modelling, planner behaviour, licensee expectations that reflect in the so called “old days”.
The debate is only about minimum education standards and an expectation that everyone should have the same, regardless of past successes or failures.
My experience is that the qualifications for the “older” advisers where like a drivers licence in the old days – very little and it was the commissions that kept them there. They have old habits and practices that in many cases don’t comply with current requirements and they are not willing to play catch-up. Their grandfathered commissions keep them in the lifestyles they have became accustomed to. They also in some cases teach new adviser bad habits and short cuts that are not in the Client’s interest.
Interesting discussion, so for all those Accountants who are now getting licences and or becoming authorised representatives, if they do not have the appropriate degree do we also suggest that they should be exempt from the need to get a degree if they have the requisite grey hair experience? Or do we propose a double standard here?
A considered & well-rounded response. I agree with the AFA’s recommendation on minimum qualification levels.
It’s never a question of qualifications, however; just because you’re academically sound doesn’t make you a good adviser. I’ve worked with some amazing academics in my time that have zero people skills.
I believe the important tests, to name a few, are – experience, good compliance standards (post FOFA), good long-term completion of continuing professional development and, most importantly, good client feedback via a third party, e.g. CAT Scan.
A degree is really an entry-level requirement for graduates and the inexperienced to the industry.
Indeed, a degree qualifications in itself does not necessarily mean an adviser will provide quality advice and mean their behaviour will change. It just means the degree-qualified adviser has achieved a certain standard and level of education, which is higher than say for example, a diploma qualified adviser.
Experience, behaviour and competence of experienced advisers, albeit more difficult to evaluate or measure, should be recognised during the transition period. It is a matter of coming up with consensus evaluation method/s and measurement criteria to establish competence. For example as mentioned in the article above, recognition criteria should include inter alia, years of experience, using track record of giving quality advice, compliance with professional association codes,and commitment to ongoing professional development.
Where does capability come into this debate?
With respect, there are many degree and CFPs in that older demographic you refer,their way of doing business may be the issue based on todays expectations – not their level of education.
Those who have a proven advice practice model with acceptable compliance and complaint levels should have additional credits to assist.
Its not as if the proposed increases to education standards have come as a surprise and there is 3 years to get the qualification anyway. We have our industry, on one hand and at all levels, wanting it to become public and government respected and on the other we have a sizeable part of it now complaining about having to lift its qualification levels. We have a history of making concessions for “older” advisers and history generally shows that we shouldn’t do it anymore. Are we going too see a repeat of the cornflake packet DFPs?
Change always brings pain but almost always the pain is worth it. There are some serious quality older experienced advisers who have already “gone back to school” but frankly there are more that are experienced in the people skills but without a qualified paraplanner constructing their advice the advice whilst being appropriate is questionably not as good as it could be. And as this article says the changes will hit the small businesses hardest but only those that didn’t accept that environmental change meant they had to obtain some broader publicly acknowledged qualifications. But I have to ask is the loss of some smaller businesses just a painful consequence that we should accept if we are to elevate the industry to where it needs to be?
I also find it worrying about the commitment of one of our industry bodies when it is clear that they want softening of education standards only so that the older advisers won’t retire early. Is that really a justifiable reason to hold back change? Will it be good or bad if they do retire early? Generalisations are always dangerous but the reality is that there are older advisers only remaining in the business because they have big legacy books that give them easy income and they are holding out for “pots of gold” multiple to sell and retire.
Let’s do the hard things and accept the new standards and remove any doubt that this isn’t a professional valuable industry.
don’t complete it by that time, they should cease practicing.
This is a terrific article and hits all the right points.
I for one totally agree!
I might cop some criticism for this but I disagree. Regularly the worst advisers I see are ‘veterans’ who have been in the industry 15 – 30 years. Experience in a time that the sales culture was absolutely rife bringing about the issues we see today is pointless experience.
They have already benefitted grandfathering of opt in requirements etc… If they were all so fantastic at their job there would not have been a need for opt in, FOFA etc in the first place.
Many, not all, are still focused on their old sales culture and just flog an average super fund and chuck as much insurance within taking upfront commission…
If you aren’t willing to study further to stay in the industry then you aren’t that serious about it in the first place. They do need to extend the timeframes however. Perhaps every adviser needs to prove they are at least enrolled and studying towards a suitable designation rather than completing in 2 years.
Its is a joke. They’ve been talking about advisers requiring a degree for years now. It’s not my fault they haven’t taken the time to go and complete one. My only proposal would be extending it to any additional three years, so they can work and study part-time and if they do complete it by that time, they should cease practicing.
Here! Here! As a customer (who happens to have a “degree” I would sooner give a greying adviser who has seen a bit but without any particular ticket a chance to express an opinion than some pimply kid with the dearest degree in the land. When it comes to survival ones own research cannot be beaten.