The board of the Financial Adviser Standards and Ethics Authority (FASEA) has clarified its position on the qualifications that will be required for individuals entering the financial advice profession, following its October meeting.
From January 2019, new entrants will need to have a bachelor’s degree that meets the criteria for ‘AQF7’ status set by the Australian Qualifications Framework.
The degree will need to comprise of 24 courses (including 12 “core courses”) that cover “ethics, professional attitudes and behaviours”, “financial planning and the advice process” and “technical requirements”.
The board is still considering its position on “pathways for existing advisers” and will establish a number of working groups and community consultation initiatives to that end.
The announcement is the first public communication from FASEA since the appointment of former FPA staffer Deen Sanders as CEO.
Let’s have a look at the students who won the 2017 AMP University Challenge. Sadly their Bachelor of Commerce from Griffith University is not on the FPEC list used by FASEA. One winner is currently majoring in Banking & Finance and not financial planning so it’s not listed and they may have to do further studies. However, one of the students is ok as they majored in Financial Planning. As far as education requirements go we’ve gone from one extreme to another.
Any 17 year old who decides to complete a Financial Planning specific degree is not smart enough to pass said degree in my view. I really can’t see this approach working — by the way I strongly agree with the overall education requirements but the actual implementation will screw up like most things involving government departments.
My point exactly.. By only using specific Financial Planning degree’s we’re teaching people how to generate a compliant SoA, but by excluding Degree’s in Commerce and Finance the quality of advisers and quality of advice in those SoA’s are diminishing. What FASEA is saying is that Accountants, Stockbrokers, Finance & Commerce Graduates don’t make good advisers. The importance of giving out an FSG and properly disclosing commissions (things taught in specific financial planning degrees) can be taught in five minutes. Storm Financial had a high proportion of advisers with Masters in Financial Planning and they generated highly compliant SoA’s as well.
Is it ironic that I completed my DFP via Kaplan this week? Despite my additional Graduate Diploma of Applied Finance, Bachelor of Commerce and years in the finance industry (not planning) – it sounds like the career change I’ve been planning is on the backburner…
No. You would still be a very decent job applicant with a business degree plus DFP. If you become an AFSL Representative (an Adviser) on or before 31/12/18 then you are “existing” and have 5 years to transition.
Not really you just need someone to take you on as an Authorised Rep before 31 December 2018 so that you are an existing adviser and therefore will have more time to complete your degree.
Yes Limbo, if this was 2019 according to FASEA your Bachelor of Commerce and Grad Dip of Applied Finance would be useless. They think you wouldn’t make a good adviser with those qualification. Luckily you’ve got 12 months to try and become an AR.
Let’s have a think about this for a moment. If you just graduated with a Bachelor of Business, a Bachelor of Accounting, A Bachelor of Finance, according to FASEA your studies don’t count and are not eligible for entering the financial planning profession. These students will have to do further courses. Yes I can appreciate the benefits of doing specialist courses in planning, but have a think how this will impact on attracting new people into financial planning. You just did your Bachelor of Business after 3 years of study (it meets RG146 now) and you turn up for a job interview only to be told you don’t qualify or missed out for the paraplanners role cause you didn’t major in financial planning. Does anyone else think we just shot ourselves in the foot?
Ok. The usual pathway for graduate study (such as Grad Dip FP) is to have a degree – relevant, or unrelated, to business. Also sufficient years of experience, with some study usually, but no degree, are now also a pathway to GDFP. So GDFP (on the FPEC list) is what you would now do instead of DFP & ADFP. NB Most existing Advisers as well as most new Advisers WON’T have an undergraduate degree which appears on the FPEC list – such as your Bachelor of Business example – as there is a broad range of business and other degrees held, but, this was the entry point for grad study.
What in a bachelor of business directly translates to financial planning? Should that same person be able to work as a doctor or lawyer just because they have a degree?
R U serious ? How about Taxation studies, Accountancy subjects which will give you the ability to read a balance sheet, legal studies and appreciate a contract. Human resources which will you give you the abilty to hire/fire staff and run a business. A list of finance studies including financial planning electives. Seems like we’ll be just generating graduates studying financial planning whose only skills will be the ability to know what a FSG is and financial planning lingo such as ROA/SOA/FSG.
If you’ve done an accounting degree why would you want to become a financial planner? You could still give financial advice, but without any of the annoying paperwork. This not only saves time, but let’s you deny anything you said if it ever goes wrong. You wouldn’t have to comply with a Best Interest Duty, so you could push all your clients into your own SMSF service, regardless of how inappropriate an SMSF is for them. For non super investment you would just recommend everyone buys negatively geared properties, so that they have a greater requirement for ongoing tax assistance.
Looking at the list of approved Degrees there are many Universities and many courses not covered. For example, if you’ve done a Bachelor of Business majoring in Accountancy, A Bachelor of Finance, chances are your degree does not meet the criteria. How does this impact on students trying to make a start into the Financial Planning Profession. What this means is that those students will need to go out and do additional Diploma courses in areas such as Estate Planning, Financial Plan construction. Also if you did a Bachelors Degree in Finance/Accounting etc prior to 2009 it’s not on the list. Just imagine all those accountants wanting to make a shift into financial planning and now they have just been told you’re a new entrant and you’ll have to go out and study another Bachelor Degree in Accountancy. So whose going to buy your business now.. How does this impact/attract new entrants to FP
Would you expect a medical doctor to hold a degree in Australia?
Enough said.
FPA you better be on top of this, in particular the CFP courses you so actively promote. For those of us who have put in the study and hours in recent years, we are expecting a ‘Masters-equivalent’ recognition from FASEA. This expectation is based on your promotion after all.
If you have done the actual CFP where you need to study, you will be fine. I have this on good authority. Decision still being made on those who were gifted CFP (and hopefully that isn’t considered ‘Masters-equivalent’ because they haven’t actually done anything).
I hope your good authority is FASEA not FPA. Unfortunately FPA has a poor track record of telling advisers one thing, then being taken completely by surprise when regulators do something completely different.
According to my licensee, which is speaking to FASEA the answer is “maybe”. The lack of clarity is extremely disturbing.
Hey FASEA, rather than requiring units of study in ethics, why not permit existing advisers with nil complaints, nil issues, clean audits and nil detraction from the industry’s reputation some credits. Oh, that’s right, that would get in the way of all those money making opportunities to spin off even more useless FP courses and put you all out of a job. You cannot teach ethics; either you have it or you don’t.
By 2019 AI will be doing an increasing amount of “scaled advice” and putting cost pressures on advisers charging for this. If only “complex” advise is left, advisers will need more than the “8 day” DFP.
Steve, for the sake of accuracy. The DFP course was not an ‘8-day’ course – it was 8 full subject with terrestrial exams and only two exemptions granted for other approved studies. I think you’re referring to the DFS or RG146 qualification courses.
Incorrect, I got my DFP in a 5 day face to face course. DC please for the sake of accuracy know what you’re talking about.
I think you’ll find DC is correct Brian. The Diploma of Financial Planning was orginally offered via Deakin University which was 8 subjects and was a Diploma levle subject. At some point with the AQF standards and RG146 being introduced the DFP was scrapped and replaced by Kaplan’s Diploma worth only 4 units and a further 4 more for a advanced diploma.
I did my DFP in a couple of months while working full-time. Should not be anywhere near enough to be ‘qualified’ to be licensed to give advice.
Why would new advisers want to enter this industry? Its not the qualifications that are the issue, its that there is very little money in it anymore and If you are starting from scratch you have no hope of making a liveable wage for many years. If you are well qualified there are better career paths.
It will be interesting on the existing adviser front too. Unless you are under 55 (which many are not) why waste the time just for a few more years of working in an industry that has become a joke.
100% right, its become a total joke all this regulation etc.
I agree. My son recently started University and asked should he do Financial Planning. I told him if he wants to invest a small fortune in education only to have his profession undermined by the Government at every opportunity, be slandered by the media every week, used by institutions as scapegoats for their own short comings and receive little respect from the general public due to the grievous misconceptions Industry Funds have been allowed to perpetuate – then go for it! He’s doing engineering.
thats the spirit!
best comment ever.. hilarious. Almost as good as the story about the Pharmacist who made the cross over into Financial Planning and left because of the over regulation and excessive paperwork.
My son too. I will not allow him near financial planning and so will end a financial planning practice that’s been around 30 years…
Why weren’t you my dad giving this advice when I was studying? Hilarious and absolutely true. I’d love to see the number of parent/son practices over past years. I’d guess this is decreasing.
I agree too. I’m telling my children to stay away from Planning as a career.
FASEA have adopted the FPEC framework in the first instance for new Advisers. If you look up that framework (or just go to the Financial Standard article today) you will see the approved Bachelors degrees and approved post graduate programs. This is good initial guidance for what is to come – that is, if the post grad list is good enough for a new Adviser, it will be good enough for an existing. Or you can just keep panicking about the issue if that suits you.
A degree doesn’t make you a better adviser. A degree doesn’t mean your ethical standards are higher. A degree doesn’t mean you won’t be pushed by a bank/licensee to sell certain products. A degreed adviser working for a product manufacturer will still recommend the same product with the same focus on sales. Yes we need absolutely need better standards & education – no disagreement here – but this isn’t the magical wand solution to ethics professional attitudes & behaviours.
You’re right – a degree is not a magic wand -but don’t be so quick to write it off as having no value at all. You see, until recently I was one of those advisers working for a product manufacturer. It was an environment with sales targets and a very restricted APL unless additional approvals were sought. It was an uncomfortable fit for me from day one, and I frequently had eyebrows raised over my requests to use products on the extended APL, or my turning business away if I couldn’t give advice in a client’s best interests that they could afford without resorting to spurious reasons for rollovers to an in-house product. Then one day a colleague did something questionable. I was right in the middle of an ethics subject for my Bachelor degree. And that course material helped me articulate what my gut instinct was telling me and go ahead with reporting it. When my report came to nothing, it gave me the courage to walk away from that job and find a practice to work in whose ethics and standards align to my own. So never say never – we should all strive to be lifelong students, and a degree is a formalisation of that philosophy.
Hi Anonymous, sorry perhaps my comments were exact enough. I’m certainly not writing off the benefits of degrees. This industry ABSOLUTELY needs better education standards – no argument here at all about that. I believe we should have a higher entry, as a few week course to become an adviser is nowhere near professional enough and clients ABSOLUTELY deserve better. I just question why everyone talks about this solving ethics and behaviours – I don’t see that as being the major outcome for the industry as a whole.
Tim, I 100% agree with your points but also wanted to highlight that the most immediate impact of these changes will be to create a substantial barrier to entering the ‘profession’. At the moment any used car salesman, clerk or general rogue can do 4 online exams, be certified as RG146 and start providing advice – at least requiring these substantial education and experience standards be met will make those that see clients as a cash cow think twice about their choice of employment. For most without a sincere wish to make this their career, the effort will just be too much.
Not quite CJ. To legally give advice they would also have to get their own AFSL or become an Authorised Representative of someone else’s AFSL. “General rogues” or “hairdressers” would never be able to get their own AFSL, and these days it is highly unlikely anyone would appoint them as an AR. The risk to the licence holder is far too great.
Improving minimum education standards for advisers is certainly a positive step. But let’s not perpetuate this myth that anyone can pass 4 easy online exams and start advising the next day. That is a deliberate misrepresentation by the trash media, and needs to be called out as such.
Dover?
yep they accredit anyone
What about new entrants with other degrees? Surely they don’t have to get a second degree! A Grad Dip or Masters would be much more appropriate
That’s where this is all heading, Ben. It has also long been highlighted as the easiest path for existing advisers with no degrees but industry experience to meet the incoming requirements. If I didnt have a degree already, I’d be starting either one of these options today.
The issue for many degree qualified advisers like me is how a ‘relevant degree’ will be defined. In the days before you could do a degree with a Financial Planning major, will degrees in Business, Economics, Commerce, Finance or Law combined with relevant experience and additional industry specific quals (DipFP, AdvDipFP, CFP, SMSFA) be enough to get a pass through the system? That’s the bit that I’m interested in.
how would a Degree in Fine Arts or Environment Science be appropriate ?
It wouldn’t be, but if you complete a further 8 specialised FP subjects at AQF Level 9 in a Grad Dip then that should be sufficient. Having said that, my SOAs are pretty dull. Maybe if I had a fine arts degree….
Was at the Afa meeting recently and was concerned by the advisors I spoke to about the future ofa financial advisor and the education standards that will be required and everyone made the same comment will be leaving the business this has to stop we won’t have many advisorsleft something must be done to allow these advisors to stay most of the advisors had been in the business for over thirty years or more
This is just a reality though. Many AFA members are risk focused and older. The education standards together with the LIF mean they are better off financially sitting on trails, cutting out new business and retiring a few years earlier. Planners will certainly want to get their education requirements as will a few new entrants but none will want to be focusing on risk when highly qualified.
This is a fair reality and not good the the mum and dad clients or underinsurance.
Insurers, ASIC, FSC, FASEA and even the FPA and AFA leadership are just completely refusing to accept what will obviously happen.
Good, if you aren’t serious enough about being in the industry to be qualified you don’t belong in it. We’re either a profession or we aren’t, professions require ample educational requirements.
I wish FASEA would hurry up and confirm requirements and pathways for existing advisers. Depending on the outcome, many people will need to enrol for courses that start in early 2018. Existing advisers that work fulltime may need several years to complete the required study on a part-time basis.
BTW will the smart alec know it alls please desist from saying “start now anyway, it’s obvious the requirements will be blah, blah, blah”. NOBODY knows the requirements until FASEA confirms them.
“ethics, professional attitudes and behaviours”, “are in short supply over at Westpac.An article in todays Australian page 11 “Westpac charging double for policies”,they story is that Westpac has added on an extra 10% for it self ,claiming different channels have different service standards !The Westpac advisers with one product on their “approved”list ,can dial down a 5.5%discount for bank customers, who are still paying 4.5% than the same product offered thru independent advisers! what does Deen sanders say about their ethics and behaviour?
So what about existing advisers ? come on FASEA pull your finger out and tell us so we can get on with life or study.. What’s a degree ? what’s going to count ? .. Interesting to see the terminology used here, that being meets AQF7 standard. So for those existing advisers who have a degree prior to 1995 it could be back to school.. Still at lot of questions.
About October 2023 they will advise.
Its great to see progress on the education standards, hopefully they will keep pushing for a masters level degree for the existing advisers. Would be amazing to see better advice being given in the industry.
As a minimum, a Maters level of education is a little high given the job requirements. Remember the idea behind this level of education was a knee jerk reaction by the institutions due to their planning fiascos. They had to show they were doing something so they publicly broadcast they would mandate high professional education standards to allay consumer fears (which were actually more to do with the banks predatory culture than adviser education levels). If education levels are touted as a panacea to issues in financial services and used to placate public perception, next market downturn we’ll all need to up skill to a Doctorate of Planning. Bachelor degree and a professional year are more than adequate.
For the most part you may be right. However, if one is dealing with SMSFs (and let’s face it there are many out there), than additional study should be required on top of the Bachelor. This would bring it close to a Masters anyway.
By about October 2023 we will get the pathways details for existing advisers. ??
Thankfully I’m already degree qualified plus, DFP, SMSF, Estate Plan, etc but how is anyone meant to start the exiting adviser path with no defined pathway ???
I agree. I have CFP (supposedly Masters Equivalent) and 2 non-financial tertiary quals (Bachelor, Masters), so my commitment to tertiary study is clear. Yet, it is not 100% clear where I stand with these transition arrangements.
I have no issue doing additional study – but we have families and clients to take care of too. You can’t just give us 12-24 months to get on top of this. This lack of clear guidance is very frustrating.