ifa poll reveals advisers are split on experience pathway

In April, the government opened consultations on an exposure draft bill and explanatory memorandum to recognise experienced financial advisers who pass the exam, have 10 years of experience, and a clean practice record.

Minister for Financial Services Stephen Jones said at the time that it was a “transition measure” aimed to stop the exodus of experienced advisers, with no history of misconduct.

“The Albanese government is committed to an advice industry with strong professional standards that gives Australians access to high quality financial advice,” Mr Jones said.

“This has been made more difficult by the previous government’s mishandling of the new education and qualification framework.”

Under the proposed measure, an adviser would be deemed to have met the education requirements if they have 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021, and have not recorded any disciplinary action on the Financial Advisers Register (FAR) before 31 December 2021. Advisers would still need to pass the exam.

While the new measures would allow more experienced financial advisers to stay in or return to the profession, the response to the experience pathway among advisers has been split.

In a poll on the ifa website that asked advisers if they support the experience pathway as outlined in the government’s draft bill, 53.9 per cent answered that they did not, while 44.6 per cent said they did. Only 1.7 per cent of respondents were undecided.

The results were correct as of 3 May. 

The poll, which has so far received 453 responses, is emblematic of the mixed response that the experience pathway has received.

Association of Financial Advisers (AFA) chief executive Phil Anderson defended the experienced adviser pathway to a degree and explained that he doesn’t necessarily believe that it is equating 10 years of experience in the industry with a university qualification.

“The actual original legislation did talk about having an undergraduate degree, or higher or equivalent, and the question is what does equivalent actually mean? I think education and experience are not the same thing, I think education is important. Having good education doesn’t mean you’ll be a good adviser, and equally having a lot of experience also doesn’t mean you’ll be a good adviser,” Mr Anderson said.

“But I think 10 years of good experience is very important, it is very valuable. Now I’m talking about there are things that you get from experience that you don’t necessarily get from education, and that’s the people skills that advisers are known for, their great capacity to work with clients, to flash out what really motivates them, what really concerns them, what their needs are. That’s not stuff that you necessarily learn at university.”

However, he also flagged some possible issues with the self-declaration of the 10 years’ experience.

For authorised representatives of an Australian Financial Services Licensee (AFSL), the government has proposed they “must” self-declare to their AFSL, which will subsequently lodge the representatives’ notice to the Australian Securities and Investments Commission (ASIC) on their behalf.

“Now I’m not particularly worried about it so much for people who have been authorised representatives for that entire time because there is an authorised rep register that goes back to the start of the FSRA days in 2003, or thereabouts, the Financial Adviser Register only started in March 2015 so who is being left out of an official register is people who were representatives, that’s people who are salaried advisers, they were employees or directors of an advice business,” Mr Anderson explained.

Eugene Ardino, chief executive of licensee Lifespan Financial Planning, told ifa that he is optimistic about the experience pathway moving into this next phase.

“I think it is great that the experienced pathway finally seems to be proceeding and we look forward to contributing to the consultation,” he said.

In the event that the experience pathway gains bipartisan support, Mr Ardino urged other licensees to be proactive in supporting their advisers who may need to identify which side of the requirements they lie on.

“AFSLs should be able to do some form of due diligence to help advisers assess whether or not they qualify,” he said.

Following the announcement, Sarah Abood, CEO of the Financial Advice Association Australia (FAAA), 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.

The CEO of education provider Kaplan Professional, Brian Knight, said that the government needs to balance its commitment to an election promise and ensure advisers are adequately educated.

“The challenge for the government is how do they adequately recognise and reward those financial advisers who intend to complete, or have completed their education pathway? The status of whether someone has completed their education pathway versus someone who has not should be clearly identifiable by Australian consumers seeking financial advice,” Mr Knight said.

“Every financial adviser who has completed their education pathway should be incredibly proud of what they have achieved. They have made countless sacrifices and have committed significant effort, money, and time. They need to be recognised and rewarded because education will be the foundation of a profession.”

SIAA urges adoption without delay

In its submission to Treasury lodged on Wednesday, Stockbrokers and Investment Advisers Association (SIAA) urged the government to implement the experience pathway without delay.

“The 10-year experienced pathway is extremely important for many of our members, not because they have no qualifications, but because their qualifications are not ‘approved’ degrees by FASEA,” said SIAA CEO Judith Fox.

“References by certain stakeholders to advisers being ‘salespeople’ with a few hours of RG146 training as a rationale for why experience should not equate to a degree reveal a profound ignorance of the stockbroking and investment advice sector and are a complete furphy.

“Many of our members are advisers with multiple degrees that are not approved, so they are currently required to do additional, unrelated study. Their existing degrees are suited to a profession in investing, yet FASEA deemed them unqualified.”

The consultation on the experience pathway closed on Wednesday, though it is unclear when the outcome will be announced.