The Advisers Association (TAA) has warned that “if we are not careful”, consumers are set to become even more confused about who to turn to for financial advice.
In a statement released on Monday, Neil Macdonald, the chief executive officer of the TAA, emphasised the importance of the experience pathway to mitigate departures, but expressed concerns about the industry’s tendency to “over-complicate” it.
“We must have an experienced pathway because in order to fulfil consumer demand for advice, we have to do something to stem the exit of highly experienced advisers from the profession. But are we over-complicating it?
“If we stand on the outside for a moment and look in, consumers must be wondering what is so difficult,” Mr Macdonald said.
Some of his concerns centre around the way the experienced pathway is being framed, such as the proposed use of terms like “experienced provider” and “relevant provider”.
“The differences between these two providers are not immediately clear and will have to be explained. There’s also the risk that people will think ‘experienced’ is somehow better than ‘relevant’. It certainly looks like that at first glance,” said Mr Macdonald.
TAA’s preference, he said, is the same naming convention for all financial advisers in law.
“The difference between an experienced adviser and a relevant adviser could then be simply addressed at the consumer level, for example, adviser qualifications or lack thereof, and experience, could be contained in the Financial Services Guide and marketing materials,” Mr Macdonald said.
Moreover, he argued against the flexibility being offered to new entrants around process changes to education and training standards not being extended to experienced advisers.
“We’re trying to grow a profession here, so these anomalies are counter-intuitive,” Mr Macdonald said.
According to him, the proposed timeframe for determining eligibility is excessively convoluted. Therefore, he suggested aligning the 10-year experience period with the current education standards deadline, specifically 31 December 2025, or before 1 January 2026.
“’Wealth Data identified that this change alone would enable an additional 555 advisers to meet the experienced pathway, continue to provide advice to their clients and, if the Quality of Advice Review recommendations are implemented promptly, free up their time to advise more consumers,” Mr Macdonald said.
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.
At the time, Minister for Financial Services Stephen Jones said 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, 51.3 per cent answered that they did not, while 46.7 per cent said they did. Only 2.1 per cent of respondents were undecided.
The results were correct as of 18 May.
The poll, which received 632 responses when it closed, is emblematic of the mixed response that the experience pathway has received.
what exam are they talking about? the FASEA one or something else?
As an adviser I haven’t over complicated anything. I have simply completed the studies that the government has told me to complete. The regulators and industry bodies however have definitely complicated it.
Experience trumps…… That should get them started – I’ll get the pop-corn.
I’ll get the choc tops!
I agree. Why is this so difficult – you shouldn’t be culling advisers who have been in practice over decades. Let them practice as long as they have not committed crimes. An Ethics course is all that is required and potentially a mandatory ethics Kaplan course as a refresher. Not everyone is vertically aligned.
Why, as someone who has been in the industry a solid 20 years, and completed a finance degree and post graduate qualifications, did I need to do an ethics unit, while Minister Jones and the ALP are allowing someone who doesn’t have a degree, and has not worked in the last 6 years, to avoid the ethics unit?
For the betterment of the industry, please stop whinging and get on with the job