When the experience pathway legislation was passed in September 2023, it was met with split reactions from the financial advice community.
For some, it represented a common-sense decision that allowed good, experienced advisers to remain in the profession despite not meeting the new education requirements. To others, it wound back measures to create a unified level of qualification across all practitioners, while some were outraged that they had completed costly and now-unnecessary education.
Under the legislation, an adviser is 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. Importantly, advisers still need to pass the exam.
Speaking with ifa, the chief executive of Fourth Line, Joel Ronchi, said the experience pathway being introduced is driving former financial advisers who meet the criteria but had stopped practicing to reach out about sitting the exam.
“The primary driver, from my experience, for ex-advisers reaching out about rejoining the profession is the 10-year professional experience rule and the exemption it provides for the higher education requirement of the professional standards, coupled with the removal of short answer questions in the financial adviser exam,” Ronchi said.
“Advisers who deliberately and voluntarily withdrew from the industry before the exam threshold expired, or who simply didn’t come back into advice because of the exam and higher education combination (but meet the existing adviser definition), are now considering having a crack at the exam.”
According to the experience pathway bill’s explanatory memorandum when it was introduced, there were 10,030 practising advisers that were first authorised in 2011 or earlier, which is the cut-off date for eligibility of the pathway.
Citing data from the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) prior to their merger, the government estimated about 6,520 advisers with 10 years of experience would benefit from the experience pathway as they have not yet met the education requirements to remain an adviser.
It also estimated that 2,086 advisers were not intending to remain in the industry after 1 January 2026, which is the deadline for existing financial advisers with no degree to attain an approved qualification.
Ronchi said that for many, they may not necessarily be keen to rejoin straight away, it’s more to do with “keeping their options open”.
“It’s attractive because of the shortage of advisers in the market,” he said.
“You weigh it all up and they’re thinking to themselves, ‘Well, why would not? Why wouldn’t I keep my options open?’”
There are others, Ronchi added, that are looking at it as an opportunity to get back into the profession they love.
“Some thought they wouldn’t be able to do it because they were never going to do higher education and the exam was challenging because of the ambiguous short answer questions, but now those two hurdles are gone,” he said.
“It’s quite enticing for many, especially as the remuneration for an experienced adviser is quite good.”
While Ronchi said that he can understand the perspective of advisers that are against the experience pathway and put value on the education standards being equal across the board, education alone does not improve the provision of advice.
“I can tell you right now that the quality of the advice across the industry is really improved, I can see that from what we do at Fourth Line,” he said.
“It’s not the level of education per se that makes a good adviser or good advice or anything like that. It’s their professionalism, the level of care they put into it, their relationship with their clients, and so forth.
“And maybe you do get some of that from higher education. And maybe it’s just built into the individual person as well.”
I am one of the considered experienced advisors that did not pass this exam ( an averaging monthly pass mark may not have helped me ). I was first appointed in 1991 and had my own business until 2018 when i sold, and became employed.
I am still bewildered how this FASEA program, came thru and destructed the industry that was becoming a profession that we all hoped for.
Very inaccurate study notes, ambiguous and non relevant questions where littered through this dammed Exam at $642, and when I was given an ” F ” nothing more- a resit or exit. I tried to get information on my exam for a possible resit but nobody replied to my contacts.
I left this 27 yr industry in 2020 and am really still empty on how this happened.
If a reader can help me get some responses please do so.
Ian Hamilton Newcastle.
The issue I see here (as an educated and experienced adviser) is that someone can do something to a poor standard for 10 years, doesn’t make them any better at it.
I have provided freelance advice and strategy production to over 40 advisers over the past few years alongside providing advice, and I can assure you that 10 years of have no idea what they are doing doesn’t make them a better adviser and should not get grandfathered in (especially when there is nothing in place to confirm their level of competence when there is no qualification to refer to – the current adviser exam assess nothing except how to interpret a convoluted question, nothing there around the technical aspects of actually giving anyone advice).
Experienced Financial Advisers without degrees has NOT been the problem with the industry over the last 33 years, it has been the Product Manufacturers producing substandard products thanks to the switch from the 1991 ASC Prospectus format to the current MIS flawed system. We need experienced Risk Advisers back into business once the compliance regime and commission structure are finally adjusted. We need to thank the AIOFP for devising and lobbying for the 10 – year Education Pathway legislation.
I would agree with this post based on evidence from my research.
The culprits have been the Product Manufacturers and AFSLs who put pressure on their “employee’ advisers to upsell, cross sell, and financial advice to disguise product sales recommendations.
Qualifications and education has been on the agenda for 40+ years and still regulators and industry bodies are arguing and dicking about with it. In this time there must have been close to 1,000 advisers charged, banned, fined or jailed for fraud, theft or inappropriate advice and it continues. The majority of honest advisers have been put through the wringer from regulators and negative public perception. So glad not to be part of the industry nowadays. Where money and greed is concerned there will always be rogues. Prevention is nigh on impossible so we can only rely on regular audits and provide reparations where wrong doing is found… and severe penalties including jail and seizure of assets for the miscreants.
Policymakers, regulators and industry bodies forget that education comes in many shapes, sizes and forms.
From formal to informal education, and they all have merit if they meet standards that are reasonable and acceptable to society.
Boo, they are the reason we are in this red tape regulatory mess tying ourselves up in knots. Get out, stay out. It won’t be until the uneducated so called Advisers are dead and buried will we ever be considered a profession…..bam!
Seriously?
Wow, such a narrow point of view.
Education alone does not make a great adviser, I have sacked some with qualification, but did not have a clue, poor skills and sales persons.
there is a reason the term educated idiot exists, and in todays ideological based education system, this has never been more accurate.
Really??
So a highly educated Adviser can’t make an error in judgement, make an irresponsible recommendation, forget to address an important component of advice or fail to act within a specific, time sensitive period…..all because they are highly educated???
What a lot of rubbish.
So enlighten me as to why a “Qualified Adviser” does not have the same “regulatory mess”?
Well said.
Still no one can explain what the dates are based on??? It comes into effect January 2026, but you must have 10yrs experience to 2021? Why not 2026???
Fair chance to challenge this in court in my opinion, how is the 12 months experience in 2009 or 2010 more relevant than 2022 or 2023? Id strongly argue its the complete opposite. 10 years experience is 10 years experience, you cant pick and choose the time frames.
But who is going to do that???? I seriously hope someone does!
Because if they did it to 2026 it would be a 15 year experience rule.