In a submission to Treasury responding to proposals made by the parliamentary joint committee (PJC) to lift the professional standards of financial advisers, the AFA raised concerns that the cost of increased education standards may be too much for non-aligned businesses to handle.
“Many non-vertically integrated licensees will find it difficult to fund training from existing revenues,” the submission said.
“This could make it considerably more difficult for them to compete against vertically integrated licensees when recruiting, as advisers may need to fund their own development.
“In addition, salaried advisers are likely to be more expensive to recruit as education standards increase and all advisers will require a higher level of ongoing training,” the submission said.
The AFA added that advisers who need to attain higher educational standards could incur “substantial costs” and time away from servicing clients, which will likely “reduce their income earning capacity”.
“This will have a disproportionate impact on self-employed and small business owning financial advisers when compared to institutionally-based advisers where the institution is likely to provide the capital for the training expense,” it said.
However, Les Mace, chief executive of non-aligned dealer group Risk and Investment Advisers Australia (RIAA) – which recently merged with Beacon Financial Group – said this would not be an issue for his business.
“With all the experience we’ve got and the industry contacts and the educators we’ve got, we don’t need the balance sheet of a bank to be able to provide the quality of education, training and practice development,” he said.
Mr Mace added that many of the new advisers who join his business from vertically integrated models want the “freedom to develop their business free from the pressure of product bias”.
“Those that are new to the industry generally join one of our established practices where they can learn from the best whilst contributing positively to their businesses,” he said.
Spoiler AFA: banks aren’t running around paying for master’s degrees either. I was offered support for an advanced diploma (but I already have one) but no financial assistance with the cost of my degree.
I’ve had to suck it up and pay for it myself, like people in most jobs. I anticipate I’ll see a good return on the time and $30,000 I’ve spent over my career. That’s how it works for most people’s education.
Sounds like grandfathering will be the saving grace of those that should be the targets for increased education requirements anyway.
a degree does not make you a professional, a person is either a professional by his/her actions or not. A piece of paper proves you have learned something it doesn’t create honesty & a professional.You want a degree, knock yourself out.
In many “professions” there is an expectation of continuing education to continue to be up to date with the current standards (and not just 30 hours of CPD… or a few multiple choice Kaplan modules).
This is opportunity for change to mandate university degree minimums to actually bring this industry into a profession. If people want to stay in the industry then they need to conform to the new norm which means finding the time and money to get themselves up to standard.
It seems that the AFA’s submission is alluding to grandfathering of existing advisers. This is not the answer, as it will take 30 years to see the change actually realised, just like the joke that the CFP is with its grandfathered recipients.
I’ve funded my own training – others need to do the same. Its no different to any other profession in my view.