In April, the government opened consultations on an exposure draft bill and explanatory memorandum to recognise experienced financial advisers who pass the exam, have 10 years of experience, and a clean practice record.
Minister for Financial Services Stephen Jones said at the time that 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,” Mr Jones said.
“This has been made more difficult by the previous government’s mishandling of the new education and qualification framework.”
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 (FAR) before 31 December 2021. Advisers would still need to pass the exam.
While the new measures would allow more experienced financial advisers to stay in or return to the profession, the response to the experience pathway among advisers has been split.
In a poll on the ifa website that asked advisers if they support the experience pathway as outlined in the government’s draft bill, 53.9 per cent answered that they did not, while 44.6 per cent said they did. Only 1.7 per cent of respondents were undecided.
The results were correct as of 3 May.
The poll, which has so far received 453 responses, is emblematic of the mixed response that the experience pathway has received.
Association of Financial Advisers (AFA) chief executive Phil Anderson defended the experienced adviser pathway to a degree and explained that he doesn’t necessarily believe that it is equating 10 years of experience in the industry with a university qualification.
“The actual original legislation did talk about having an undergraduate degree, or higher or equivalent, and the question is what does equivalent actually mean? I think education and experience are not the same thing, I think education is important. Having good education doesn’t mean you’ll be a good adviser, and equally having a lot of experience also doesn’t mean you’ll be a good adviser,” Mr Anderson said.
“But I think 10 years of good experience is very important, it is very valuable. Now I’m talking about there are things that you get from experience that you don’t necessarily get from education, and that’s the people skills that advisers are known for, their great capacity to work with clients, to flash out what really motivates them, what really concerns them, what their needs are. That’s not stuff that you necessarily learn at university.”
However, he also flagged some possible issues with the self-declaration of the 10 years’ experience.
For authorised representatives of an Australian Financial Services Licensee (AFSL), the government has proposed they “must” self-declare to their AFSL, which will subsequently lodge the representatives’ notice to the Australian Securities and Investments Commission (ASIC) on their behalf.
“Now I’m not particularly worried about it so much for people who have been authorised representatives for that entire time because there is an authorised rep register that goes back to the start of the FSRA days in 2003, or thereabouts, the Financial Adviser Register only started in March 2015 so who is being left out of an official register is people who were representatives, that’s people who are salaried advisers, they were employees or directors of an advice business,” Mr Anderson explained.
Eugene Ardino, chief executive of licensee Lifespan Financial Planning, told ifa that he is optimistic about the experience pathway moving into this next phase.
“I think it is great that the experienced pathway finally seems to be proceeding and we look forward to contributing to the consultation,” he said.
In the event that the experience pathway gains bipartisan support, Mr Ardino urged other licensees to be proactive in supporting their advisers who may need to identify which side of the requirements they lie on.
“AFSLs should be able to do some form of due diligence to help advisers assess whether or not they qualify,” he said.
Following the announcement, Sarah Abood, CEO of the Financial Advice Association Australia (FAAA), reiterated the group’s earlier stance of advocating for limitations on the pathway and announced that the FAAA would consult extensively with its members to finalise its submission.
“We continue to feel strongly that there should be a time limit on the pathway such that a relatively young adviser does not continue to practice indefinitely without relevant qualifications,” Ms Abood said.
The CEO of education provider Kaplan Professional, Brian Knight, said that the government needs to balance its commitment to an election promise and ensure advisers are adequately educated.
“The challenge for the government is how do they adequately recognise and reward those financial advisers who intend to complete, or have completed their education pathway? The status of whether someone has completed their education pathway versus someone who has not should be clearly identifiable by Australian consumers seeking financial advice,” Mr Knight said.
“Every financial adviser who has completed their education pathway should be incredibly proud of what they have achieved. They have made countless sacrifices and have committed significant effort, money, and time. They need to be recognised and rewarded because education will be the foundation of a profession.”
SIAA urges adoption without delay
In its submission to Treasury lodged on Wednesday, Stockbrokers and Investment Advisers Association (SIAA) urged the government to implement the experience pathway without delay.
“The 10-year experienced pathway is extremely important for many of our members, not because they have no qualifications, but because their qualifications are not ‘approved’ degrees by FASEA,” said SIAA CEO Judith Fox.
“References by certain stakeholders to advisers being ‘salespeople’ with a few hours of RG146 training as a rationale for why experience should not equate to a degree reveal a profound ignorance of the stockbroking and investment advice sector and are a complete furphy.
“Many of our members are advisers with multiple degrees that are not approved, so they are currently required to do additional, unrelated study. Their existing degrees are suited to a profession in investing, yet FASEA deemed them unqualified.”
The consultation on the experience pathway closed on Wednesday, though it is unclear when the outcome will be announced.
The poll is highly subject to “participant BIAS”. How outspoken have some existing and new advisors been on bagging the the experience pathway. I believe all the pole demonstrates is that they are as active and outspoken as ever. The old experienced hard-working advisors that are the backbone and the origination of this industry unknown do not bother with poles like this even if their livelihood hangs in the balance they’re just not the type of people to be forward and outspoken but a lot of the new advisers coming through have a lot to say with of understanding and experience. I’m becoming more and more vocal as a representative of these that don’t speak for themselves for the future of the profession because there are so many voices that do not understand professionalism do not understand the history did not understand the concepts but I have plenty to say
Just a comment to Mr Brian knight of Kaplan. Your comment is conflicted. You are an education provider. Of course your going to want to promote the education side and put older experienced advisors at a disadvantage…we all value Kaplan…BUT. there are many including myself that do not meet the current education requirements but I have a masters degree in commerce currently undertaking PhD studies you cannot say I’m not educated but that’s what you’re saying… by introducing a difference that the public sees doesn’t do anything to promote uniformity in the profession or the spirit of unity. Because I don’t expect you to change your view I just want others that read this to understand that what you’re saying Is NOT correct and is ill-iformed. Your opinion is not helpful in assisting the professionalization of financial planning
Just a heads up to all the financial advisers who have survived so far, and staying while continuing with “business as usual” servicing their new and existing clients in a political, economical and legal environment of uncertainty and delays. You all have GRIT!! Hang in there and continue to look after your clients, because there is not much else it seems one can do while everyone waits.
What a mess this industry/profession is in.
Agreed! – and Long John Silver ‘er Stephen Jones to fix the “hot mess”, or maybe not…
When the industry finally sorts out the now 1 million orphans floating around on the Investment Platforms, then we can argue the toss about who is educated & who isn’t. Until then, it’s time to get some real work done, which includes passing these legislative changes that recognise real-world experience qualifications for seasoned advisers & stockbrokers.
Being reasonable, Sarah’s recommendation to have a time limit on the exemption makes sense. Anyone under the age of 40 who qualifies could do the graduate diploma on an extended time frame, say by 31 December 2030.
But it’s not necessarily an exemption from education. It’s an exemption from a mickey mouse “FASEA Approved” course. Advisers who already have higher quality education should not be forced to do a demeaning “FASEA Approved” course now, or in 10 years, or in 17 years, or ever.
Imagine if 44.6% of Doctors / Lawyers / Engineers relied on “experience”. And yet, we have the audacity to consider ourselves “professionals”.
IF the Dr, Lawyers and engineers are trained as well as many experienced advisers without the appropriate designated degree that I would consider them professional. Where so you fit Molly
Well John..I will leave you to go to an unqualified but experienced doctors …called ‘witch doctors’ or ‘quacks’ or snake oil salesmen’
I suspect Molly works at Treasury or ASIC – no professional qualifications needed.
36 years’ experience, started off with Legal & General Life, did cold-calling for insurance sales, now have a Masters. IMO, ASIC is a complete waste of time.
Lots of influencers will agree with you, John. A degree is as revealing as is the lack of one.
Imagine if all the doctors/lawyers/engineers who did their degrees at high quality institutions years ago were told they had to stop practising because their qualifications were worthless and their experience irrelevant? Imagine if the only doctors/lawyers/engineers allowed to practice were those with mickey mouse qualifications recently completed at Deakin, Griffith, Charles Sturt, UWS, or Kaplan?? If that’s professionalism, society has a big problem.
so advisers who have left the industry – does that mean that if they decide to come back under the 10 year rule will they have to do the professional year as a new entrant?
Yes. As additional punishment for taking the lazy way, make them suffer the ignominy of being trained by an inexperienced graduate.
It’s very obvious the majority of Advisers are not in favor of the 10-year exemption. In the FPAA submission, they stated 88% of their members have or a close to completion of qualifications already and their members said “in strong terms” didn’t support the 10 year period, but at least if the 10 year exemption was to proceed then an ethics course to be completed.
Peter Johnston in an email to AIOFP members stated, about Advisers that had already completed their FASEA qualifications and were against the 10 year rule,.quote ” It seems certain they agree with what has happened over this horrible journey,[b] let’s hope none of them want to join the AIOFP, they are far from welcome ” [/b][u][/u]
Advisers do not agree with what happened. No adviser is happy being a CBA scape goat but the AIOFP stance is very diversive. Given the AIOFP encouraged members to complete the poll, the results have been skewed in favor of the 10 year exemption. Let’s hope this anti Education stance dosen’t lead to more division.
How many members does the FPAA have now? Is it a credible cohort to count? AIOFP has 5000 members.
The SIAA keep banging on about all the qualifications that their members have but you have to start to question the currency and relevance of them to financial advice if they can not get them approved?
I think we need to clear the decks but the requirement for a full degree is too much too soon. Surely we can just increase the time frames required and allow more than 3 years and some RPL for experienced advisers?
This has been known for over 4 years now. Most advisers have only been required to do 2-6 units of an 8 unit Grad Dip which is very generous. It is not a full degree!!
They have until December 2026!
I finished mine including the Masters in 2021. There is plenty of time but it is now starting to run out.
This is about a line in the sand. Just do it.
Right , that has already happened twice….so lets give them more time…and on and on till all of us are dead…
I am a CA and Financial adviser. I, along with a whole lot of others my age, knocked off the educations requirements (I am 63 now) because I thought the whole purpose, when this was proposed and approved years ago, was to create a new profession and raise it to the standard of others, like CAs and Lawyers. It was clear and understandable that this could be a challenge for some older advisers, and hence they were given 8+ years to study or retire, then the time was extended again. Most advisers who are 40+ (say 70% of the total of 16000 advisers) would have 10 years experience and clean records. So now the plan is to exempt 70% from study??? What happened to the contemptuous comments that it was easier to qualify as an adviser than a hairdresser…which by the way, was true.
When I go to CAANZ meeting and hear them bagging advisers, I must admit they have a point.
Good work by IFA to take the poll and show that 53% were not in favour of the changes..because it otherwise seemed that everyone was in favour.
I hope your comment is framed.
The Australian Labor Party should be condemned for removing the requirement for financial advisers to have a degree. They are even removing the requirement for all advisers to do the ethics unit.
To think that someone can be out of the industry for the last 6 years, but waltz in now is a joke.
This survey has been gamed by competing self interested parties.
Just like education providers did their best to promote more stringent requirements to assist their business model we have parties who have done the education and want less competition versus the others who have a jaundiced view of education and regulation without reference to actual client outcomes and direct responses.
If you are a dud adviser you won’t have too many clients after 10 years.
Just get on with it.
And while we’re going through all this the Industry Fund “advisers” are on the cusp of not requiring any education or experience at all!