No apparent benefits from one-off exams, says professor
Members of the education sector are once again questioning the government's proposed one-off exam for financial advisers, arguing that such tests do not typically achieve much except raise money.
Adam Steen, a professor of finance at Charles Sturt University, told ifa he believes a one-off exam on top of the other proposed requirements will only place an extra burden on advisers, and it does not seem necessary.
"You can have certain people who can pass lots of exams but are they necessarily going to be anymore ethical? That's the question. The evidence from overseas is quite mixed but that kind of exam doesn't do much," Mr Steen said.
"It raises a lot of money if everyone has to pay for it. It creates a whole new body and provides employment for a few people who are administering the exam.
"But I don't know what it's going to achieve because you end up creating an additional burden on people. It's going to cost a hell of a lot of money since you're basically setting up another instrument and another body. I'm thinking less is more," he said.
While Mr Steen does not back the exam proposal in the government's draft bill on new adviser standards, he is supportive of having advisers top up their education.
If the draft bill is legislated as is – forcing all advisers to become degree-qualified – advisers should make the most of the situation by gaining a degree in a specialised field.
For instance, demand is growing for financial advisers who have up-to-date training in estate planning – an ideal study option for advisers heading back to school, he said.
"What's happened is that a lot of people might have done estate planning courses 10 years ago but things have changed and so have a lot of the requirements in estate planning," Mr Steen said.
"We're trying to cater for all levels of entry into our courses by not only giving people the 'tick off' but also providing something that they don't have."
He added that there seems to be a misunderstanding about the degree path, in that many experienced advisers believe this entails completing a four-year program and re-learning much of what they already know.
However, Mr Steen said there are ways for seasoned professionals to instead enrol into postgraduate programs using their years of experience and other qualifications.
"If you're a planner or an adviser, and you've been in business for a number of years, and say you've got an advanced diploma that you did a number of years ago, you don't need necessarily to go into an undergraduate degree," he said.
"For people like that, who are older and experienced people [who have] got some former qualifications, we are allowed under government regulations to take them into a postgraduate course.
"Then, if you complete the subjects and get credits for your previous studies, that's a lot shorter, a lot quicker and less expensive [than a four-year degree] and you'll enjoy the experience more because you're with your peers," Mr Steen said.
Another education provider, from a Deakin Prime subsidiary, recently told ifa he doubts whether the exam will solve the industry's professional issues.
Banks win from grandfathering ban, says industry body
The banks will win out at the expense of advisers should the government abolish ...
Financial advice to remain ‘cornerstone’ of AMP
The embattled wealth giant has explained how it is transforming its advice netwo...
AFSLs cancelled for not joining complaints body
The corporate regulator has cancelled the licences of two NSW-based financial se...