Ahead of the 31 December adviser education deadline, estimates of how many advisers would be unable to practice varied widely, with the Australian Securities and Investments Commission (ASIC) flagging that as many as 2,326 advisers could be forced to exit the profession.
Yet the reality is likely to see fewer leave the profession than even the most optimistic projections.
In late November, Padua Wealth Data founder Colin Williams put the “best case scenario” at 892 advisers exiting, with the upper range cracking 1,600 and the “most realistic outcomes” seeing a loss of between 1,100 and 1,500.
Taking into account movement from 1 December, the education deadline has so far claimed 440 advisers – the number that have been taken off the Financial Adviser Register (FAR) and have yet to rejoin.
However, it isn’t all good news, with licensees having a 30-day window to update their records and the potential situation of advisers remaining registered even though they do not meet the requirements.
Speaking with ifa, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson agreed that the result is “not as bad as expected”.
“It’s not definitive because the 30-day deadline will take us through until the second week of February. However, the data set has been made available a couple of times already this year, and we can see from that, that yes, there are still a few for whom they do not demonstrate the fact that they are eligible to continue to operate,” Anderson said.
“However, the decline in numbers is much less than we had originally feared. So we’ve got all those who have already come off – and some may go back on – and then we’ve got those who appear not to be appropriate to have remained on. If you add the two of those together, it’s still not anywhere near as bad as we had feared it could be.”
The ballpark figure of total losses, given the number that could potentially leave due to delayed reporting or any advisers that are still incorrectly registered, is more likely to be around 650 than the thousands feared prior to the deadline.
How many advisers left the register with the intent of finalising their qualifications and then coming back also makes the long-term impact even harder to quantify.
Crucially, any adviser that ceased their registration prior to the deadline are able to avoid the need to redo their professional year (PY), as those who remain on the register but don’t meet either requirement will be required to do so in order to continue practicing once they complete their education.
“The ability that has been there for quite some time, which is called the career break option,” Anderson said.
“So, they can still come back on. Kaplan ran a further study period. There’s potentially a number of people who are dependent upon the results of that to be eligible to come back on.
“Ultimately they will pass the requirements, they are just a little delayed, and they can’t operate until they’ve done it, so they can’t cause any harm.”
However, there is a danger of advisers that do not meet either the education or the experience pathway requirements still operating – though Anderson noted it could be difficult to identify these individuals.
“You have to conclude that they’re not eligible, and you’ve got to conclude that they are still operating,” he explained.
“The problem is that they may still be eligible. There are still some who could tick the experience of as a pathway box. There are some who could provide their documentation or their licensee could get around to processing it, that shows that they’ve met the education standard.
“We can’t be definitive until the time has run out, and then secondly, they may not be practising anyway, so they may not be causing any harm. They may just be the fact that the paperwork hasn’t yet been processed to take them off.”
Ultimately, he said, it will require ASIC going through each adviser that doesn’t appear to be eligible and either taking them off or dealing with the matter “as it may be appropriate”.
