Industry demands limitations on proposed experience pathway

On Tuesday, the government opened consultations on an exposure draft bill and explanatory memorandum to deliver its election commitment to recognise experienced financial advisers who pass the exam, have 10 years of experience and a clean practice record.

Applauding its move, Sarah Abood, the chief executive officer of the Financial Advice Association Australia (FAAA), said the announcement gives much-needed clarity to those advisers in the profession who have been counting on this change to support their goals to continue advising clients beyond 2026.

“We believe that relevant experience is an important element to maintaining the required standard for professional, quality financial advice that will provide the best outcome for Australians,” Ms Abood said in a statement emailed to ifa.

Nevertheless, she reiterated the group’s earlier stance of advocating for limitations on the pathway and announced that the FAAA would consult extensively with its members to finalise its submission.

“We continue to feel strongly that there should be a time limit on the pathway such that a relatively young adviser does not continue to practice indefinitely without relevant qualifications,” Ms Abood said.

On the upside, she said proposals to increase the flexibility around approving relevant qualifications for new entrants are particularly welcome.

“We have raised many instances where small course changes (in some cases as little as a unit name or number change) have led to qualifications being disallowed which do not fit the exact language of the relevant determination. This is extremely disheartening for students who have successfully completed these courses, and we are hopeful that more sensible flexibility will now be available.

“The FAAA will continue working closely with the government to help make financial advice more affordable and accessible to Australian consumers, as well as providing clarity and appropriate flexibility to financial advisers about their education requirements.”

Neil Macdonald, the CEO of The Advisers Association (TAA), echoed Ms Abood’s views on imposing additional limitations, stating that while TAA supports increasing access to affordable personal advice for consumers, it is essential to put guardrails around experienced advisers who lack qualifications.

“We previously suggested making this clear in their Financial Services Guide and having a sunset clause of 10 years from 1 January 2026. Combined, this would mean better-informed consumers with access to advisers, and the sunset clause would stop potentially 35-year-old’s being grandfathered for life without any formal qualifications,” Mr Macdonald told ifa.

“Initially, in our previous submissions, we suggested at least 15 years of experience to 31/12/25. If there was a sunset clause, we are less concerned about whether the experience is 10 or 15 years and to what date. In our response to this submission, we will ask for a sunset clause and would not push for 15 years even though that was our preference,” he explained.

Also speaking to ifa on Tuesday, Peter Johnston, a long-time supporter of the experience pathway, described it as a “common sense, fair approach to difficult circumstances”.

The executive director of the Association of Independently Owned Financial Professionals (AIOFP) said: “The Opposition has already supported the conditions both pre and post the last federal election, it should therefore pass both houses of Parliament without incident”.

“This is a great step forward to save the risk industry, the next objectives are to increase the commission numbers and have an industry-specific exam format,” Mr Johnston added.

The CEO of the Stockbrokers and Investment Advisers Association (SIAA), Judith Fox, joined in applauding the pathway and said that it was necessary to prevent the loss of experienced advisers.

“A further exodus of experienced advisers was on the cards without draft legislation confirming the experienced pathway,” she noted.

“At a time when the advice gap is recognised, losing more experienced advisers makes no sense and it is to the government’s credit that they have acted to prevent additional loss of expertise.”

SIAA noted that experienced stockbrokers and investment advisers put their education on hold when the Labor government was elected in May 2022, in light of the Minister’s election commitment to introduce an experienced pathway.

“The release of the draft legislation setting out the form of the 10-year experienced pathway for advisers provides the much-needed certainty they have been seeking,” Ms Fox said. “They know that their education qualifications and wealth of experience are being recognised and their clients will retain their advice services.”

Advisers have been divided on the experience pathway since it was first announced by Financial Services Minister Stephen Jones ahead of the 2022 election, with the ifa’s comment section reflecting that divide on Tuesday.

Namely, many advisers appeared to be supportive of further education and viewed it through a self-development lense, with one adviser writing: “This shouldn’t be an excuse for not meeting a high standard of education like the advisers who are currently licensed”.

Another added: “I would never recommend my family or friends to see any used car salesman financial planner without appropriate qualifications.”

Just last week, Wealth Data suggested that as many as 3,166 advisers could benefit from the government’s announcement.