In comments to ifa on Tuesday, shadow financial services minister Luke Howarth said improving the pathways for new financial advisers to enter the sector has “bipartisan support”.
“The professionalisation of the sector has been an important development and something I support,” Howarth said.
“But the number of advisers and the replacement rate we currently have is clearly far too low.
“I appreciate there has been an industry-led approach to revising the education standards.”
He specifically pointed to the efforts of the Joint Associations Working Group (JAWG), which had put forward a number of “core principles” to improve the pathways for new advisers to enter the profession last year.
However, Howarth said a number of the stakeholders have told him they are “frustrated by the delays” in government action on opening up the education standards.
In a statement on Monday morning, Financial Services Minister Stephen Jones announced that the government would reform the current education pathway for advisers, which he said is “not sustainable”.
“School leavers are not attracted to the specialised area of study and it is a significant investment for career changers. Fewer higher education providers are offering courses due to the lack of entrants,” Jones said.
“Under the government’s changes, the proposed education standard will centre around a new requirement to hold a bachelor’s degree or higher in any discipline.”
Howarth said he was “pleased” with the minister supporting streamlined degree requirements but is disappointed that it is “another announcement on the eve of an election, with no hope of it being legislated”.
“While I would have to see the detail, I am supportive of making the degree requirements more flexible and getting more advisers into the market,” the shadow minister said.
“Taking this work forward would also be a priority for me as minister.
“The demand for advice will only be increasing so we need a pool of advisers that is expanding too.
“But I also acknowledge the importance of professionalisation of the industry and the many advisers who have done the work under the existing rules.”
He also reiterated his support for “getting accountants back into the advice space”, arguing that the limited licensing model doesn’t work.
“When we have a lack of advice, particularly specialised advice which overlaps with tax and accounting – this doesn’t make sense to me. Crucially, it means it is more costly to get an SMSF set up,” Howarth said.
“I agree we need to look at making it easier again. These are trusted, qualified professionals.
“But to make it fairer, we would also need to look at financial advisers being provided access to the ATO portal. Tax agents can do this but financial advisers generally can’t.
“I know this is a big issue for advisers and if I was to become minister, I’d be talking to the tax commissioner to work out how we can make this happen.”
Appearing on The ifa Show in December, Howarth supported calls for accountants to be able to provide some form of financial advice to help fill the gap in advice accessibility.
“At the end of the day, I respect accountants significantly,” he said.
“My experience with accountants is they’ve provided good advice. They’re often people that you go to if you want to look at setting up a self-managed super fund and they’re qualified people that know tax law inside out.
“So, giving a little bit of advice, I don’t fear that at all from accountants and I think it probably should be looked at.”
ATO portal access for financial advisers has also been a hot topic, with Treasury releasing a consultation paper, Review of Tax Regulator Secrecy Exceptions, that has sought feedback on whether the ATO should be permitted to disclose certain ATO-held information with registered financial advisers where they are providing financial (tax) advice to their clients.
However, the paper raised a number of issues related to cyber security, implementation costs, unintended or pressured access and whether timeliness of data would be assured.
“The size and sophistication of financial advice businesses – and their ability to manage cyber security risks and large amounts of sensitive information – varies widely. While there are some large firms, many financial advice businesses are small businesses who may lack the expertise and resourcing to provide a high level of data protection,” it said.
“Giving financial advisers access to client information increases financial crime risks, which not only affects the retirement savings of members, but can disrupt business operations for an extended period.”
Here’s an idea.
1. We start with the axiom that a Graduate Diploma contains the fewest and most essential subjects required to become a financial adviser.
2. We therefore need more Graduate Diploma programs and more people to enrol in them and be able to enrol in them.
3. Ergo, we need the government to back universities to provide a Graduate Diploma in Financial Planning and we need pathways to help people get into these programs. An example would be 2 years related work experience or 2 years full time equivalent of university study in any subject. This would mean people thinking of changing majors after 1-2 years would be able to complete a Graduate Diploma in Financial Planning and could graduate at the same time as they would otherwise have with a Bachelor Degree.
4. The cost of these degrees should be subsidised, so instead of costing $20k-$30k+ p.a. they may cost $10k on HECS. This part would be temporary until adviser numbers are back up.
5. These programs should include work placements to help people get into jobs – it could initially be an admin job but that’s a start.
Just a thought.
The Uniparty strikes again…
Because he has no idea of the implications or the hoops people have had to jump through in the past.
All the same, disgusting.