The SMSF Association says many of its members who are close to retirement could be forced out of the industry under FASEA’s proposed education requirements.
In a submission to the Financial Adviser Standards and Ethics Authority (FASEA), the SMSF Association said if the education thresholds are too high under the new standards, particularly for existing advisers, this may “cause damage in the short to medium term for the financial industry”.
“An adviser exodus from the industry is a risk that is posed under this circumstance,” warned the submission.
“If advisers believe that the time, cost and effort to become appropriately qualified under FASEA’s pathways [are] too extensive it may cause significantly experienced advisers to exit the industry.”
The submission stated that it is advisers with the most experience who are most likely to leave the industry because of their proximity to retirement.
“Older advisers may be disenchanted by the fact their experience and accreditations are not adequately recognised, the amount of time and cost that will go into study and the fact they may be forced to restudy subjects they have met the learning outcomes for,” it said.
An adviser exodus, it said, also has the potential to lower the quality of advice given, as the remaining advice demand is met by advisers who have less experience.
“It may also result in a loss of experienced mentors for younger advisers. Furthermore, a lack of advisers may mean the Australian public’s need for financial advice is not satisfied as well as it could be,” the submission said.
The SMSF Association said FASEA should explore a framework for older advisers who are approaching retirement and to whom a degree and graduate diploma study are unreasonable propositions given the time and cost requirements.
“For example, one potential design would be to allow financial advisers who are 60 years of age or older as of 1 January 2024, have over 10 years of experience and have significant recognised prior learning to be eligible to undertake a bridging course rather than the formal studies for advisers without a degree,” the submission said.
“We would support arrangements as such with a caveat that these advisers would be subject to a sun-setting date by January 2030. This would see advisers continue practising until their retirement. If advisers wanted to consider longer term practising then they would be forced into the other FASEA pathways.”
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