The Government’s proposed reforms to financial advice education standards clearly and appropriately set out the introduction of a degree requirement for new financial advisers. The requirements for existing advisers, on the other hand, lacks certainty and will leave many financial advisers in limbo for another 18 months. An increase in standards for financial advisers is important, however those existing advisers with quality small businesses and strong client relationships need certainty with respect to a realistic increase in their education standard.
Phil Anderson, Head of Governance and Advice at Pathway Licensee Services commented “We fully support the introduction of a degree requirement for new financial advisers from 1 July 2017, however do not believe that this is practical or appropriate for existing advisers. The draft legislation and Explanatory Memorandum talk about a degree equivalent and pathways for existing advisers, but also state that a new standards setting body would be responsible for resolving the detail but only after they are established on 1 July 2016. The consultation on this reform process has been underway for a long time and clarity, rather than further uncertainty, is what is needed”.
“Existing financial advisers should be able to work out what additional education they need to do and then be able to start this additional training as soon as possible. As the current proposals stand, existing financial advisers will have no idea what they need to do and will be unable to start any further training until clarity is provided and that may be another 18 months” Anderson said.
If the end outcome was a strict requirement at the degree or degree equivalent level then we could expect to see a substantial number of experienced advisers leave the market place which would put their clients at risk. Existing advisers, who are currently running or working within a small business financial advice practice will not have the timeframe or the capacity to complete further study at the degree level. Such an outcome would have a seriously detrimental impact upon the financial advice market place and reduce access to financial advice for Australians.
Phil Anderson said “We have made the point in our submission to the Government that existing financial advisers deserve certainty with respect to a realistic increase in the minimum education standard. Our submission makes a number of key recommendations with respect to education standards, a registration exam and the establishment of a new Code of Ethics for financial advisers”.
