One of the (many) criticisms of the adviser education reforms was that they left older advisers out in the cold by expecting them to undertake further education when they had already been in the industry for decades.
Speaking to ifa last year, David Reed, a retirement adviser from The Retirement Advice Centre, said he was concerned the financial planning industry could see a wealth of experience walk out the door, with older advisers believing retirement is preferable to going back to school.
“There are nuances when dealing with clients that I just don’t see in the text book,” he said.
“The thing is that there are some fantastic advisers, but is this going to result in a loss? We’ve had three phone calls in the past week saying, ‘we just can’t do this – maybe it’s time to leave’.
“There are some very quality advisers around who might not meet the requirements.”
The crux of the argument was that the soft skills that older advisers have picked up during the course of their careers were not being valued. For many long-term planners, the proposed changes left them feeling confused and concerned that they would be forced out.
In fact, according to the ASIC adviser register, more than 11,000 advisers do not hold a bachelor’s degree.
However, at the end of April, when the government released the much-anticipated revised draft legislation covering new adviser education standards, there was some clarity and good news for those concerned.
Many of the proposals remained the same, but there were some key changes which addressed the problem of recognising prior experience.
A statement from Assistant Treasurer Kelly O’Dwyer noted that changes to the draft include clarification that the reforms “are not intended to require existing advisers to complete a bachelor’s degree”.
“Existing advisers will be required to reach degree equivalent status, which can be achieved via a number of flexible pathways, including by completing bridging courses approved by the new standards body,” Ms O’Dwyer said.
The new draft also extends the transition timeframe from 2019 to 2024.
“We recognise that existing advisers will need to balance any further education requirements with the demands of continuing to provide high-quality financial advice to their clients. Existing advisers therefore need sufficient time to meet the new standards,” Ms O’Dwyer said.
“The education and exam requirements are proposed to commence on 1 January 2019 (revised from 1 July 2017).
Existing advisers will have until 1 January 2024 (5 years) to reach degree equivalent status and until 1 January 2021 (2 years) to pass the exam.”
As for the independent, standards-setting body, Ms O’Dwyer said it will initially be a Commonwealth company. The government is also considering allowing the body to recognise adviser experience.
For many proponents of the education reforms this was a win.
While the FPA and the AFA were steadfast in their support of the need for higher professional standards in the financial planning industry, they were clear that they didn’t think all advisers had to rush out and get degrees.
“I can assure [you] that from the FPA’s perspective, we’re not advocating that all [advisers] go and do undergraduate degrees,” FPA chief executive Dante De Gori said in February.
Mentor Education managing director Mark Sinclair may also be happy with the decision. He controversially put forward the view that SMSF, risk and advisers who offer limited services should be exempt from the requirement to obtain a “fully-fledged” degree.
“Accountants, life insurance and other advisers seeking to provide personal advice in SMSFs, and who limit their advice to retail clients, should be exempt from the requirement to do a fully-fledged degree as this would entail studying subjects that are not relevant to that adviser,” he said before the revised draft proposals were released.
Mr De Gori hit back at this and called it “irresponsible” and not in the best interest of consumers.
“I think it’s dangerous to start exempting people from different education standards. That is counterproductive. It is not in the interest of consumers and it’s not in the interest of fostering a proper profession,” he said.
“I think anybody that is authorised and licensed to provide personal advice to a consumer, irrespective of whether it’s limited or specialised in a particular area, has to be held to the same education and training standards.”
And many contributors to the ifa comments section agreed, with one reader saying: “I don’t often agree with the FPA, with this issue though I’m fully on board. And before I get howled down, my financial planning discipline is risk.”
A comment by another ifa reader, Gerry, encapsulates the mood surrounding the revised draft education legislation.
“Finally getting some recognition for previous effort – but there could be a lot more done to encourage advisers to strive for higher education standards rather than using time deadlines,” he said.
While it has been a long and windy road to get here, it seems that some in the industry are warming to the reform of the education requirements for planners, particularly as the experience that older advisers have to offer is being noted and appreciated.
