Following Financial Services Minister Stephen Jones’ Delivering Better Financial Outcomes (DBFO) announcement on Tuesday night, Treasury released a fact sheet on the details that are currently available.
Among the limited information included is a statement on the education level for the new class of adviser (NCA), with Treasury noting they “will be required to complete an AQF level 5 diploma, to ensure they have the expertise to provide high-quality simple advice”.
Speaking with ifa, Financial Advice Association Australia chief executive Sarah Abood said that while the association is pleased with the statement of intent that NCAs are seen as a pipeline to becoming full financial advisers, “the questions are around the detail”.
“In particular for us, we have not supported NCAs being able to give retirement advice out of super funds. We don’t think that that advice can be considered simple,” Abood said.
“Many of the super funds employ advisers to provide this advice to the members, of course, which is fine, but I think it’s unlikely the diploma-level qualification would be sufficient to provide this kind of advice, which is highly complex even for so called ‘simple people’.
“The members of funds may have partners, they may or may not own their home, they may have stepfamilies – there’s so much potential complexity that the super funds are not aware of on the surface, and the idea that that kind of advice, which is substantially outside the member’s interests in the fund itself, I think for the cost of that advice to be collectively charged, that also, in our view, is inappropriate.”
How the pathway to becoming a professional adviser plays out is also up in the air, as it is so far unclear how universities would treat a diploma in terms of recognition of prior learning.
“We’ve been really clear that we want to see the education be appropriate for the advice, so that consumers are getting advice from somebody who knows what they’re talking about. That’s the most important point,” Abood said.
“Secondarily, we want it to count towards a planning degree. We haven’t yet had a chance to engage deeply with the universities on this, but I think that generally, AQF 5 would not be recognised in a standard way.
“There may be some other discussions that we can have about ways that study could be recognised, and each university is a little bit different in the way they’ve structured their courses, and how they manage recognition of prior learning and so on.”
In June, the Council of Australian Life Insurers (CALI) argued in favour of a Certificate IV level for NCAs, which would only reach AQF 4.
Responding to the suggestion at the Adviser Innovation Summit in Sydney, Abood said it would not help create a pathway for the new class of advisers to eventually make their way into providing professional financial advice.
“We only put on 370 new advisers last year and we’re not going to get our numbers back to where they need to be unless something dramatic changes. But for these people to be a potential source of new advisers, their education has to be in our ecosystem. It’s got to provide a pathway to financial planning degree,” she said.
“AQF 4 won’t cut it. You’re not going to get recognition for that if you want to go on and complete a bachelor’s degree and become a full financial adviser.”
While the level of education is higher than AQF 4, exactly what the diploma will involve is “going to be important”.
“We’re all assuming that if you’re working out of an insurer, it’ll be a diploma of insurance, and if you’re working out of a super fund, it’ll be a diploma of superannuation and so on, but we haven’t actually seen that level of detail either,” Abood told ifa.
“I think we need to go to the next level of detail.”
As someone who has AQA level 9, and regularly interacts with advisers on levels 6-8 who don’t understand time value of money problems, the thought of allowing AQA L5 is terrifying.
More education not less!
AQA L5 expectation for NCA is laughable. Mind you ASIC RG 146 could be taught to teenagers.
Im still confused, why since 2018 have approximately 15,000 advisers left the indusry? Full circle in 6 years.
After the last 10 years of financial services legislative mess, the last 10 years of constantly moving goalposts, the last 10 years of mental anguish and pain for Financial Advisers, the last 10 years of added cost to the consumer, the last 10 years of meaningless, ideologically driven self-interest groups manipulating Government and the last 10 years of endless educational uncertainty and being told the only way forward is to have a Tertiary qualification and become a ” professional” and a “profession”………we end up in this place.
You could never write a more disappointing story and the emptiness and lack of value, respect and support this delivers to the vast majority of Financial Advisers who have adjusted, survived and accepted what they had to do in order to continue to service the best interests and financial well being of their valued clients.
It is an abysmal state of affairs and just about the most deep seated lack of respect any Govt could deliver to Financial Advisers.
This should never get up, never get through and never be implemented.
This is an abysmal legislative stuff up of immense proportions.
“will be required to complete an AQF level 5 diploma, to ensure they have the expertise to provide high-quality simple advice”
Since when? Why then was the minimum education level for Real Financial Planner lifted so high – turns out it was either wrong then or it is wrong now? What has changed?
An AQF 5 Diploma would not have any value in upgrading to the current education standards for professional advisers.
However the Treasury announcement says “The Government is reviewing the education pathway for professional advisers” and “The pathway will be aligned with the education requirements for the new class of adviser.”
This suggests that after the December 2025 deadline for existing advisers to meet the FASEA education standards, the government will lower education standards to enable new entrants to qualify via an AQF 5 Diploma pathway.
I want all my grandfathered comissions paid back to me with interest
So these new NCA’s complete a diploma and away they go, providing advice on “simple” topics, but a new, professionally qualified adviser has to sit a professional year and pass the ASIC exam to provide advice on the same simple topics.
Change of Government in 2025 will bring a new set of changes to the industry. I would not worry about it, the NCA program should be buried, it is not in the best interest of the Australian Public, full stop.
First step imo is to stop calling them advisers, They will be product floggers unless employed by relevant financial planning firms. The Government is constantly telling clients that retirment and super are complex issues yet they seek to reduce the complexity by allowing advice that will not be complex in nature nor will it be all encompassing. This is simply another way for the current government to look after their union/industry fund mates with no concern for members at all. The members leaving industry funds I talk to complain of lack of interest, lack of support, lack of understanding and lack of service. Fix this crp up first then maybe allow these funds to start to try to provide quality advic eto therir members. Returns and fees are not the issue retirment is about goals and dreams for the clients future an these so called advisers will still ot be able to ensure that kind of advice will be provided. IMO of course.