The government has 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.
Dubbed the experience pathway, the proposal seeks to equate the worth of a degree with 10-plus years of experience in the industry.
Commenting on the announcement, Minister for Financial Services, Stephen Jones, said 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. This has been made more difficult by the previous government’s mishandling of the new education and qualification framework,” Mr Jones said.
“Since 2019, over 10,000 financial advisers have left the industry in response to new standards. Many were unsuited to the requirements of the new industry, which include professional qualification. However, this has pushed some experienced advisers, with no history of misconduct, out of the industry, reducing access to advice,” he continued.
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 before 31 December 2021.
Advisers would still need to pass the exam.
The draft legislation also allows new entrants to apply to the Minister to have their degree recognised and for education providers to confirm that a person has completed the requirements of an approved degree.
According to Treasury, these amendments would address cases where would‑be advisers currently fail to meet the education standards for technical reasons.
Comparison of the new law and current law
While the current law obliged an existing adviser to complete an approved qualification by 1 January 2026, the new law equates a minimum of 10 years of full-time experience with an approved degree.
Under both the current and the new law, advisers need to pass the exam and comply with continuing professional development requirements. However, in order to be eligible for the experience pathway, advisers also need to have a clean disciplinary record.
Regarding new entrants, under the current law, new entrants were asked to complete an approved qualification, including meeting all the conditions prescribed for that approved qualification, as determined by the Minister in the Approved Qualifications Determination.
However, under the new law, the Minister may approve one or more ways of satisfying the conditions for an approved qualification. This, the Treasury explained, provides greater flexibility to new entrants, recognising that there may be different study pathways available to satisfy the education and training standard.
Moreover, under the new law, new entrants with a domestic qualification may apply to the Minister for individual approval, where that person has completed an approved qualification, as determined by the Minister in the Approved Qualifications Determination, but not met all the conditions attached to that qualification.
Financial advisers who are registered tax agents are also set to benefit under the new law, with the government proposing to relieve them of the need to meet the additional education requirements.
The government is welcoming responses to its consultation until 3 May.
The experience pathway was first announced by Financial Service Minister Stephen Jones ahead of the federal election in 2022 which saw Labor assume government.
Despite the optimistic expectations of certain financial advisers, progress towards fulfilling this promise was slow. It wasn’t until December of last year that the Minister finally provided an update, offering assurance that the government would commence consultations and have provisions prepared for legislation by the first half of 2023.
Just last week, WealthData suggested that as many as 3,166 advisers could benefit from the government’s announcement.
The lack of education and being compared to hairdressers have held back this industry for decades and contributed to over regulation and advisers being easy targets. Now when we have chance to stop being the kicking board for every corrupt CEO a few selfish advisers want to hold us back. Australian can’t get advice due this bad regulation, that has partly been caused by a few hairdressers.
The Minister is only looking at 1 aspect. The overriding reason why 10,000 advisers left, is because of the ASIC Industry Levy on those advisers registered on its FAR. ASIC enforcement costs arising from Hayne Commission abuses caused by financial institutions was recouped from financial advisers who had done no wrong and we suffered 3 times over: (1) PI insurance premiums cost by overseas insurers doubled plus (2) ASIC Industry Levy = 3 times. Then when Treasury receive enforcement reimbursements from big banks, it was not recredited back to ASIC Industry Levy as a saving in cost to financial advisers. Former Minister Stuart Roberts said Treasury was recovering 1.6 times ASIC’s enforcement costs, which would have been inflated by the big law firms acting for ASIC. The ASIC recoupment model was designed by big banking Executive, David Murray AO where the effect was to reduce financial adviser’s’ industry competition against big banks and their $Ms profits that breaches best interests’ duties in the public interest of retail financial services. Politicians are hopeless at understanding industry competition factors for its Microprudential efficiency framework.
What about you mean spirited ‘degree’ people showing some compassion for the older Advisers or their families who have either taken their own life or suffered severe trauma over the FASEA experience. Most of the 30 suicide cases were older risk advisers who should have never been required to having a degree standard just for the risk content of the knowledge universe. Don’t worry, these Advisers are not a threat to your world and you don’t want their clients anyway…..
I decided to re-enter the industry last year. I have 18 years in global banking and multi asset class sales trading across four continents, at a senior level, yet the firm hiring me was unable to as I needed to undertake a Grad Dip. Now that in itself isn’t the end of the world, but having to fork out $2,500 and 150 hrs to study about Client Engagement Skills as part of a Grad Dip……please, spare me.
Happy to continuously learn and improve. In fact the Ethics and Professionalism subject was pretty interesting. But let’s make it relevant and on the job as part of the 40hrs CPD.
All good experience there but since you’ve never actually been a financial adviser before I think it is reasonable that you should be required to do the training. We are trying to professionalize after all.
After completing the GDFP in recent times, I feel I am no better equipped to provide financial advice that I was already providing. An ability to create a sentence and spend time to answer questions that I have answered since 2005 was a major waste of time and money. Much like my original degree that was not finance related, the programs are not made to make us better planners nor reassure we have improved what we are supplying. You hand in an assignment or complete an exam and you are told a score, great if I get 50-70%, what can I improve on to get to 100%? I hate the Australian education, no educational system is training us to really get better and improve. The GDFP was more a test whether I had a relative grasp on english and essay creation/formatting.
That is all I see from this supposed improvement as an adviser is providing.
Once the consultation period is over they begin investigating and testing the ideas through Treasury?
I meet the requirements, but don’t want a free kick, and am embarrassed by those peers who do. If you have any credibility, then put in the small effort required to meet the requirements. You still have more than enough time and if you’re 50% the adviser you think you are, you’ll glide through the study. Stop holding us back with regressive solutions.
So advisers who have 10 or 15 years’ experience, with impeccable records are “holding you back” because they don’t see the need to do a course on how to prepare insurance advice or investment advice? Please. Keep being embarrassed, Dave.
Imagine the heads exploding in the Registered Training organisation head offices………..expected/budgeted revenue streams from older planners disappearing. Not to mention low entrant numbers coming through. Expect rationalisation on that front too (education providers) – dont need them all.
I understand everyone’s views regarding doing the extra studies for self-improvement and becoming a profession etc. Will the extra study really make a difference given that the Grad Diploma subjects are more or less identical the the Advanced Diploma subjects that most experienced advisers have already completed? It is still early days regarding the dates and timeframe of the pathway however do empathise with those that have completed the studies if it wasn’t needed.
The lazy and incompetent have left the building. They narrowly missed the door hitting their buttocks. Happy days are here, again. I have my Masters and could not care less about the never-ending changes to the goal-posts.
I don’t have the masters and now it looks like I don’t have worry either.
But… will prospective clients be so tolerant?
I don’t have my Masters and couldn’t care less about the never ending changes either.
Glad I spent that $10k for enrolment and $50k of my time to get my Grad Dip !!
Didn’t need it.
Thankfully you’re accepting you’re disappointment and aren’t trying to drag others in the profession down for not getting a Grad Dip
You’re having a lend mate. NO provider in the country charged that. Net cost after tax benefits was less than $1,000 per subject for me.
Good on you!
And what the time where you can’t earn money?
Surely one of the core requisite skills of a competent financial planner is the ability to actually plan for the future and not simply holding on by a wing and a prayer that regulators will succumb to the will of the hordes of lazy dinosaurs choosing to throw a tantrum rather than take the opportunity to improve their skillset. Not doing the study and hoping for the best is akin to investing a risk averse retiree entirely in bitcoin and crossing your fingers. If you are willing to be this laissez-faire with your career and practice and not do the study, I sure as hell wouldn’t want you near the retirememnt planning affairs of any of my friends or family. Stop whining, do the study or get out and let the rest of us get on with it.
Hi Max B, you might want to back that down a bit – Michelle Levy was no “wing and a prayer” and many Product providers with huge FUM and thousands of members have all it appears been relying on the fact the qualification required to deliver Financial Advice would be reduced – and Labor spelt it out before the election – so perhaps silly not to have been planning on such a reduction – but we all have opinions and a preparedness to back the reading of the future.
Max you are spot on. That is the test. I would never recommend my family or friends to see any used car salesman financial planner without appropriate qualifications. These people will defend the indefensible, similarly to the democrats. Sad sad day for Australian consumers. The opportunity to clean the slate was lost due to the lobbying and large bribes, sorry “donations” from industry funds. What a shame. Embaressing industry. I guess similar to used car salesmen that only care about the dollar they can earn, so it does not matter, its a big win in their mind. Congratulations.
Maybe just get on with it?
Hey Maxxy, I held on by a wing and a prayer and saved myself a lot of time to look after my clients instead (not to mention money). Delighted with the news today !!
Good summary Max B. Last comment sums it up perfectly!!
Finally someone doing what they said, Like or dislike the content is irrelevant.
Umm not quite, no legislation – consultation has commenced. QoAR proved that means stuff all
Ok. But sunset clause. This shouldn’t be an excuse for not meeting a high standard of education like the advisers who are currently licensed.
Like the degree qualified adviser I came across recently who is charging an 84 year old lady $8k per annum for “advice” on her ABP which is fully invested in an externally managed discretionary account? Spare me.
And how about the hundreds of “CFP”s out there who were effectively grandfathered. Maybe they should return their certificates?
Sensible outcome, hopefully ensuring many good advisers continue to provide advice & pass on knowledge & experience to the next generation of advisers.
Equating a degree to 10 years of experience is probably over estimating the worth of a current degree given the declining standard of Australian tertiary education since 1994.
Mark, how would you know the standard of education, clearly if you support this you haven’t done this
Worked in academic publishing for a number of years. Have a degree thank you. Of even greater value however is the 12.5 years I’ve spent providing risk advice to my valued clients.
What baloney. We will never become a profession. First they allow institutions to re enter industry to sell direct products AND now they allowing people without appropriate academic qualifications to continue to sell product. Just Wow. What an embarrassing industry. It’s all about self interest and money, NO betterment for the end consumer. And yes I will hear all the whingers reply with their selfish interest trash. That’s OK. Facts are facts. Whenever you leave things to the government then you know it’s going to end up BAD. I’m selling up. Bye bye to the dodgy used car salesmen industry.
Used car sales industry – 1
Profession – 0
There are multitudes of “degree qualified” advisers who had their snouts deep in the troughs of volume bonuses, licensee transfer payouts, kickbacks, free conferences and lots of other stuff over the years. They now try to hold themselves out to be better than some of their peers. Spare me.
History will tell us that people that are just wanting to earn as much as they can, with the least effort, are likely to have minimal mandatory education. But history also tells us that some of the best scams, rip offs and poor consumer outcomes have been designed and executed by the very well-educated and smart people. Whilst it may be preferrable and indicates commitment, a degree does not guarantee honesty just someone that might seek a bigger reward for their commitment and ingenuity. That’s OK. Facts are facts.
What a shame, you are spot on re “we will never become a profession”.
As long as products are involved, we WILL NEVER” become a profession.
10 years.? Based on those dates its 10 years within a seemingly random 15 year period – that on current date of 2023 is heading towards needing to be a planner for up to a minimum of 12 years to meet it, and prob end up being closer to 13 years by time this is actually approved. Should not current date, or the date at which it becomes approved be the 10 year mark.
Neither actually. It should be the date it becomes a requirement, which is 1 Jan 2026. By measuring the 10 years backwards from 1 Jan 2021, it will effectively be a minimum 15 years experience requirement.
It was a promise that the Liberals supported during the election campaign. Time to deliver it, to help provide vital service support to the over 1 million fund member orphans floating around on the investment platforms.
Wouldve been nice if the Liberals had have done this whilst in govt rather than rip the industry apart