It is customary early in a new year to declare the coming 12 months to be pivotal, or critical, or in some way the most important period the financial planning industry has faced. But it’s not just rhetoric or hyperbole to declare 2018 exactly that.
Between now and June 29, the Financial Adviser Standards and Ethics Authority will seek submissions on what the industry thinks about proposed guidance FASEA issued last year on education qualifications for existing advisers.
As if it could have slipped your mind, legislation passed just over a year ago states that all existing advisers must attain a bachelor’s degree or higher, or an equivalent qualification, approved by FASEA, by January 1, 2024. The penalty for not meeting the new standard will be getting barred from practising as a financial planner or adviser.
FASEA released guidance in October last year that set out a clear pathway for new entrants into the financial planning industry, and it should be applauded for its pragmatism in adopting the Financial Planning Education Council (FPEC) accreditation process for approved degrees. But at that point it left unaddressed the standards for existing advisers. Some of this group may already be appropriately qualified and need only confirmation of that, while many others won’t meet whatever standard is adopted.
For the latter group, some form of further education is going to be necessary, and FASEA did not make it clear what form that should take. Nor was it clear what credit existing non-degree qualifications and industry experience might provide for advisers towards meeting the new standard.
In December last year, some answers emerged. FASEA issued proposed guidance on existing adviser qualifications, setting out what it was thinking about potential pathways to compliance by 2024. It also signalled the beginning of the consultation period.
FASEA says it wants to focus on “the practical application of the proposed guidance, and how the adviser community might be supported in adoption of the requirement”. It’s not interested in debating whether or not “a bachelor or higher degree, or equivalent qualification” is the right standard; the law says that’s what the standard shall be, and that’s the beginning and the end of that particular discussion.
FASEA recognises there are many advisers, with diverse backgrounds, qualifications and levels of experience who need to know what, if anything, they will need to do to pass muster by 2024.
That’s why it is actually, genuinely, difficult to overstate why the coming year is so important. The first half of it will be consumed by the consultation process, then FASEA has to really get its skates on to develop guidance that is both easy to understand and, most importantly, relatively easy and affordable to implement. That has to happen quickly. Even if it takes only the second half of this year, when it’s done it will be 2019 and advisers will have only five years to do what they need to do.
And that’s why it’s understandable that advisers are getting increasingly frustrated at what they perceive as the standards authority’s inaction. FASEA’s board has to take some responsibility for that.
It’s understandable that the board wants to get the standards absolutely spot on, and Professional Planner has stated before that the worst thing that could happen would be the release of a set of half-baked ideas that have to be amended and reviewed multiple times before they’re workable.
But the board has to strike a balance between that and the dangers of allowing financial planners to ferment in a wort of ignorance and misapprehension. Since its inception in June last year, FASEA has released only a handful of comments giving any insight into its processes and progress. That’s understandable for a new entity that until September didn’t even have a chief executive, and which has yet to be properly resourced to do the job it’s been set up to do. But this year things must improve.
Last November, FASEA chief executive Deen Sanders made a rare public appearance at the Financial Planning Academics Forum in Hobart. It was a salutary experience. A room full of academics who had been antagonised by the release of information to the media before they’d received it themselves, and who might have been preparing a somewhat cool reception for Sanders, came away with a deep appreciation for the scale of the task ahead of the standards authority, for the chief executive’s command of the issues and his willingness to engage, and for his commitment to getting the job done right the first time.
FASEA’s best weapon to combat escalating adviser disquiet and antipathy is its own chief executive. His appointment was an early masterstroke. He enjoys enormous credibility among advisers, and even those who do not like the idea of having to measure up to higher standards and still harbour some resentment over his appointment due to his previous role at the Financial Planning Association, grudgingly admit he’s the best person to do the job. So the board needs to give him what he needs to do it. FASEA must be adequately resourced, and quickly, to enable its chief executive to spend more time communicating and engaging with the community the authority seeks to regulate.
The board must, to borrow a political phrase, let Sanders be Sanders.