Stephen Jones has moved to address education standards in the financial advice industry, today announcing that Treasury will develop a consultation paper on options to “streamline the education requirements for financial advisers”.
“The Government made an election commitment to remove the tertiary education requirements for financial advisers who had passed the exam, had 10 years’ experience and a clean record of financial practice. I have asked Treasury to develop a consultation paper on options to streamline the education requirements for financial advisers, including for new entrants. I expect consultation to commence shortly,” Mr Jones said in a statement.
“Industry has also made representations on the Code of Ethics and identified improvements that industry thinks could be made. I have heard these views and I have asked Treasury to consult on the Code in 2023, after the Government has considered its response to the Quality of Advice Review.”
In the lead up to May’s federal election, Mr Jones said Labor would not require advisers with 10 years of experience and an “unblemished record” to complete a university degree to practice.
Currently, existing advisers with no degree must have an approved qualification by 1 January 2026.
On a special Momentum Media podcast recorded prior to the federal election, Mr Jones outlined his plans to address the education standards.
“… there’ll be a bunch of people who’ve been providing excellent advice for decades that we don’t want to tip them out of the industry at exactly the time when we need them,” he said.
“We need them as mentors, we need them as service providers, we need them as trainers, we need them in the industry.”
On Wednesday, Mr Jones also addressed the 30 September deadline for existing advisers to pass the exam and continue to provide financial advice, saying that following the deadline, he will ask Treasury to explore how the exam can be improved, such as reducing the number of questions.
“I continue to support the exam as a benchmarking tool which tests the practical application of a financial adviser’s knowledge, including on regulatory and legal requirements, and ethical reasoning,” he said.
“I remain committed to the exam testing these knowledge areas and content.”
On the latest episode of the ifa Show podcast, the Association of Financial Advisers (AFA) CEO Phil Anderson expected that the Albanese government would make good on its promise to address education standards, while the Financial Planning Association of Australia (FPA), said that addressing the education standards should be the “first order of business” for Mr Jones.
The current requirements have been criticised by a number of groups within the sector, including the FPA, AFA and The Advisers Association, with CEO Neil Macdonald saying the industry will experience a “mass exodus” by 2026 if changes are not made.
The number of advisers in Australia shrank below 19,000 late last year and is predicted to reach 13,000 by the end of 2023.
Previously an adviser with over 10 year experience was in a management role when the changes came in and was not authorized to get study exemptions.
Currently hold Bachelor of Commerce (Economics), Diploma Financial Planning, Advanced Diploma Financial Planning, CFP Designation and Masters of Applied Finance. To become an adviser again would need to do 6 subjects of graduate diploma and professional year. A fresh uni graduate has a higher recognition than all of the above its a joke.
I’m pretty much done and thinking about leaving the industry.
Maybe the minister should hold a vote for advisers in the industry around the requirements rather than associations and businesses petitioning their own point of view at the expense of the advisers who do the work and who are ultimately held accountable
Maybe the Minister should hold a vote for consumers around what they require and expect of their Advisers – from educational standards (AFTER they’ve seen what “education” actually involves & covers…and what it doesn’t), to paperwork/compliance and everything in between. I’m extremely confident that most would want almost the opposite of what is being forced on them by the government regulators via the Advisers
Silly, silly, silly! (head palm)
There will be this whole merry dance on consultation, during which our associations will argue and gaze at their navels. The education standards will then be watered down, and the Government will be able to say “it’s what the industry wanted!”.
At which point, the Industry Fund network will put their nefarious marketing budget to work and start wacking us with their big bat with ads plastered everywhere “See! Financial Advisers can’t be trusted!!”
Which will be just in time to distract from any attempts on transparency on THEIR practices, whether it be valuation of unlisted assets, smoothing of unit prices, destination of marketing funds, etc, etc.
… And that’s how the big boys play.
It wonta be eazy under the Albanese.
Not any better under ScoMo (the chosen one)
All 100% guarantee you, when we call for real reform, and removal of the bad legislation, the Government will say “what are you complaining about, we gave you your education carve outs, you got what you wanted, and now you’re wanting more carve outs.”
The reality is this measure should have been considered in 2018 some four years ago. But it wasn’t…..Now, the Advisers that make comment supporting this usually start with “I” and “me”….selfish advisers that don’t give a rats about their peers or how they are perceived by the public.
I am comfortable with lowering education standard for people who have had DECADES ( = 20 years + ) of experience per the quote in this article. 10 years is not decades. it is a A decade. DUH. and such people should be over 50/55? or so, ie not have a great period of time to earn back the cost of the degree. Minimal exceptions in our journey to a profession.
Why should those advisers who haven’t been able to pass the FASEA exam after 3 years be looked after. The rest of us have passed the exam plus completed further education qualifications, whilst dealing with the ton of legislative rubbish that has been thrown at our profession.
Just because you have been practising for 10+ years does not automatically make you a better adviser. Sure, you should be able to get credit for a few subjects based on your experience, but sorry you still need to complete a degree.
If we want our occupation to be recognised as a profession and be taken seriously then advisers need to be degree qualified.
I suggest Stephen Jones spend his time looking at ways to reduce the compliance regime so that we can get back to helping clients, rather than trying to dilute the education standards of our profession.
100% agree with this – professional standards matter, and compliance red tape can’t simply continue to push up the cost of advice.
I’m not sure Jones is going to look after the 3 year, multiple failers. He seems to be deliberately delaying any changes until after the extension to the extension deadline in Sep, with a view to then ruling a line under it after the failers have finally been removed. Any changes to the exam after that are likely to apply to new entrants only.
Advisers are doomed if this is what the new Financial Services Minister is proposing as his first action…
You wouldn’t want a nurse to perform brain surgery on you even if she has worked for a neurosurgeon for decades. I’m 71 and looking forward to finishing the last 4 subjects for the Grad Diploma, ‘the more you learn, the more you’ll earn’. Let’s move forward as a profession not an industry.
Inspirational! Well done!
What about a Neurosurgeon who qualified in 1970 – are you going to insist for new Qualifications – remember – a lot has changed since this Neurosurgeon first qualified?
Probably retired or stopped being able to get affordable PI so not a relevant to financial services example.
Assuming the Neurosurgeon who qualified in 1970 was 30 at the time, that would make him 83. There are two things:
1. In the 50 years they have been working, they would have done thousands of hours of further study.
2. He would need to be registered with the AMA who have reasonably strict guidelines over who can and can’t do things
3. Personally, I don’t know if I would be comfortable with an 83yr old operating on me
Sweep them out already
I’m just tired,
I’ve over 10 years of experience, passed the very first exam easily, have completed 7 of the 12 topics in Masters – looking ahead at more $$$$ to complete more subjects which won’t make a shred of difference, or make me a better adviser, or improve my compliance rating, or reduce the current 60 hrs + a week before the study.
So yes I can do the study, I’m just not sure I want to anymore. As all it is, is a piece of paper that hasn’t taught me a thing sadly but has cost a lot of money, but might let me stay being an adviser (mind you they will probably change the goal posts again anyway).
I’m just tired and get why so many are leaving and why so many more are considering doing the same, completed study or not, not everyone is a business owner or 60 – some are just average people who have been doing their best to look after there clients – Yes it’s been a decade – actually it’s been “the” decade.
So fantastic and well done to those who’ve been able to complete their studies – congratulations and well done, however, nothing is rarely simple – we are not just advisers, we are also Husbands/Wives/Partners/Parents – some of us earn well others not so much – yes there is Study assistance, but you only make that mistake once when you get to tax time.
Some of us are just tired, so I imagine a future where there are a lot less advisers with a lot fewer people able to get help.
Advice is just broken.
If you are so tired, and concerned about the cost, and sceptical of the value, why are you talking about a 12 subject Masters? The maximum education requirement for existing advisers is an 8 subject Grad Dip. You are only one subject away from completing that. Masters is an entirely optional extra. No need to torture yourself.
Advice is broken but we can repair it if we have the right people like you in this industry. You’ve demonstrated you’re a professional by doing that education.. it’s broken because of people that operated at the minimum for decades, minimum compliance, minimum education, minimum care factor maximum personal wallet factor. Now we’ve got those same people wanting that to continue. You’ve got just one subject to go and you’ll have a Grad Diploma if you pull out…that’s a personal achievement no one can ever take off of you and you’ve operated above the minimum. I thank you, your peers thank you for helping making Advice better and the service you’re doing to making Advice more affordable. Thank you and well done.
Exactly this. I am nearing the end of my studies but I have put the whole thing on pause recently. In truth, my studies have taught me very little too, and I agree the cost is not insignificant. However, it’s the time for me. Hours and hours lost that I could spend with my family. The Ethics unit was one of the most painful episodes I have ever experienced in education. At the very least for others who have yet to complete it, this needs to be reviewed. It’s horrendous and serves no purpose whatsoever. Just because I suffered it, it doesn’t follow that others have to in my mind. That attitude will get us nowhere.
The education standards need to stay….the horse has bolted…its time we moved on for the majority of those who have passed the exam, and either met or will meet the education standards by 2026.
It’s the over compliance and red tape we should be focussing on but lets look at the experience issue.
Everyone seems to measure and think that time in the industry is experience.
Yes we have all done the necessary CPD but this can be a tick the box approach in some cases.
If I look at everyone’s (the dissenting minority) qualification and experience on the FAR, what would be seen? Diplomas of FPs from the mid-nineties which I bet would be the case for those dissenting the most?
These were the basic qualifications at the time, and no doubt some came with a CFP automatically which again reflected the time.
But what since or is it just experience?
So, no further investment in yourself, or if you have, it is not significant to put on the FAR?
Our industry, yes industry and not profession, has not been viewed favourably to date.
Finally, inroads have been made with the education requirements which mean most advisers need only do 2-6 to six units at most.
It brings us all to constant and hopefully on the path to professionalism.
Education is a key component of professionalism, along with experience and along with being a member of a professional body.
Sadly, at this stage we only have associations, but hey, many to choose from.
Several are advocating for a carve out. Yes another carve out.
Everyone wants a carve out.
Let’s go through the list.
First there are the “I have had over x number of years’ experience, so I don’t need to do any education….
Then there are the stockbrokers, the ones who say their industry is different because they do is buy and sell stocks etc, (are they really giving just general advice?) yet most promote financial planning and investment advice
Then there are the Risk advisers. Risk protects wealth, creates estate, is part of super and investment strategies, has tax implications if not done correct, may need tax structures, needs to be part of financial, personal, and business planning etc….,it involves the art of talking to people and human behaviour and it must be with the required ethics and under the FASEA code…..Hang on… I have just outlined the 8 units of a Grad dip as set by FASEA….fancy that. They should breeze this study.
Then finally the trusted accountants.
If their trusted relationship and knowledge was so good, then how did Financial Planning ever evolve?
Planning is not all about a SMSF, nor is it just verbal. And how good have those limited AFSLs turned out?
The high education standards are necessary, as the hope as we become professional, the legislative issues will become less and perhaps as a profession we can become self-regulated which is a hallmark of a true profession.
When we are seen in this light by the community, the need for formal regulations should reduce, bringing the cost of advice down hopefully.
Regulatory oversight is inversely proportional to professional status.
Just think CPA, Chartered Accountants and the Law Society as examples as to where we need to get too.
But back to everyone here, are you on this journey as well?
Or will the loud minorities resistance, and delusions of thinking that experience is all that is needed, ( I would like my surgeon to be well qualified and have experience) keep our industry locked in time?
Precisely. Leave the Education requirements in or the lack of professionalism will always be a reason to put layer upon layer of additional compliance burden on in the future. Reducing education requirements is the last thing we should be doing. Reduce the compliance burden and risk!
You got is exactly right!
Why waste the political capital on watering down the education standard for this subset of advisers?
Degree minimum will have been on the cards for a decade by the time 2026 rolls around.
I would much rather our advice documentation standards to be more in line with the other advice industries (accountants, lawyers) which would benefit all advisers, than have education standards lowered for the benefit of a lazy few.
WTF?? He’s only just got around to “asking Treasury to develop a consultation paper on options”!! He should have already announced the final outcome by now. There was more than enough consultation on this issue by Treasury under the previous government. They don’t need more input. They need a responsible minister to make timely decisions.
What has Jones been doing? Carrying Albo and Penny’s bags on their overseas jaunts? Or has he been too busy absorbing all the instructions from his union bosses at ISA? This is a very bad start for him.
This is the first step to walking back from his promise. “Treasury told us that the educational standards are not onerous and should be the minimum acceptable standard” will be advised in however long it takes Treasury to type it out.
What a joke, why drop the requirement to do a degree? Yes a subject or 2 should be given for experience but not dropping the requirement altogether!!!
If an someone cannot pass their industry exam after 3 years then by default they are not qualified to provide advice to anyone else about their financial affairs. Further, there should be no carve outs whatsoever for an experience pathway of over 10 years or any other length of time.
It is about time we took our industry seriously and got rid of the deadbeats.
The degree standard was legislated in 2017 – so advisers will have had a minimum of 9 years to get brought up to a 3-year degree level. Advisers have had even longer to plan on getting up to standard when you consider that the writing was on the wall long before then and that a number of large licencee’s moved to implement degree minimums as far back as 2014.
Why protect this cohort at the expense of all other advisers who, while facing the same industry pressures and struggles, have done their part to lift the standards of the profession?
At 10-year look back, we can have advisers in their 30’s who don’t meet the degree minimum, pushing back the date at which we would have collectively cleared this hurdle by decades. What a daft policy.
Yes, it the same trap as grandfathered CFPs. Many of them received their ill gotten designations while in their 20s and 30s and they will be around for a long while yet.
The FPA executive has a well rehearsed mantra that says “it was the highest education standard available at the time, and most of them will be retired soon anyway”.
Absolute garbage. The grandfathered CFP was just a dodgy deal to generate an additional revenue stream for the FPA. It was nowhere near readily available education standards expected of professionals at the time, and it will be decades before all the “grandfathers” are cleansed from the system. Meanwhile the credibility of the real CFP designation, and the FPA as a whole, has been trashed by FPA’s refusal to fix their error.
It has been about a decade that people have known a degree is required. Things should not change.
Yep, let’s keep the advisor in the industry that hasn’t studied for the exam, could not be bothered doing further education, is likely a glorified insurance agent in their 60’s with million dollar practices, who decided it was best to take holidays then apply themselves to the new standards, and now is crying poor about time frames because it did not fit in with their lifestyle choices…yep, let’s keep those advisors in the industry because they have the ‘experience’…pfft.
“… there’ll be a bunch of people who’ve been providing excellent advice for decades that we don’t want to tip them out of the industry at exactly the time when we need them,” he said.
Why is the exemption 10 years then, when he stipulates decades in his comment. It should be those with 20+ years experience get an exemption. Those with less experience have time to gain an appropriate qualification. 10 years is too low.
And get rid of the ethics module for existing degree qualified advisers!
Another disgrace for the industry…..that will now always be an industry, not a profession if the bar isn’t raised.
Still can’t believe the comrades tabled something that has been addressed years ago for the greater good….
This isn’t where governments should focus…..their energy should be directed to compliance burden costs.
Sounds like most if not all of the “indignation” about not forcing out very experienced faultless advisers (no complaints or breaches against them) comes from newly qualified kids who think financial planning is all about academic knowledge, or gulls from FPA and AFA.
No, just from advisers who are interested in lifting the standards in financial planning.
It’s obvious where you sit, “experienced but not papered” so your comment reeks of self-interest. Good planners are a mixture of things and educational standards is one of those.
Existing advisers have had a minimum of 2/3rds of units required for a degree sliced off, so plenty of recognition given for ‘experience’….but some, like you, think they’re the exception and deserve special consideration…..
No one is being forced out, if an adviser leaves the industry rather than meet a degree minimum then that is their own choice.
This is not an onerous hurdle, particularly when you consider the amount time given to meet it.