Any opinion of the new adviser education standards must first be prefaced with an acknowledgement that the only thing that has been set in stone is that standards are coming. So far, we have a mandate from Finance Minister Kelly O’Dwyer, and a proposed framework from the Financial Adviser Standards and Ethics Authority. As of today’s date, the official FASEA consultation period has not begun.
I say this to make clear that indignant, impassioned rants against the impending education standards are largely premature. You can’t rage against a machine that hasn’t been built yet.
Since conducting research for our February cover story, “Back to School”, which looked at how the spectre of enforced education is affecting advisers, two things have become clear. The first is that previously attained degrees might be given an expiration date, for the purposes of allowing the holder to continue as a financial adviser.
At the Self-managed Super Fund Association National Conference, FASEA chief executive Deen Sanders explained that while the authority’s purported adoption of a 10-year rule was “a myth”, degrees completed before ASIC was formed in 1998 might be viewed differently than younger ones. A 10-year rule might not be on the table, but a 20-year rule, or something in-between, might be.
To abrogate degrees as qualifications based on their completion date sets a restrictive precedent.
There will always be learning that is missing from a degree. They start to date the moment they are printed, but that shouldn’t annul the qualification itself. If it did, financial planning degrees completed today would also be on the expiry clock. Degrees don’t have a shelf life, and shouldn’t be considered temporary accreditations or designations. If I had completed, for example, a variant of a financial planning degree 11 years ago, in 2007, I would be aggrieved to be told that it wasn’t an approved qualification.
This is especially relevant for older advisers with specific financial planning degrees, who should be put on a pedestal for committing early to the professionalism we’re aspiring to now. Some of these advisers committed to the best and most appropriate qualification in financial planning before it became the cause du jour. They did it because they had a clear mandate of their own – to best enable themselves to become a professional planner.
Older, relevant degrees should provide credit towards an approved degree, and if an adviser has already completed a financial planning degree at any time, that should tick the box entirely.
Sanders is perfectly placed to make the right decision here, given his previous experience as chief executive of the Professional Standards Authority of Australia. He knows what makes a profession valid in the eyes of the public. My hope is that he views degrees of any age equally.
Where experience doesn’t count
There’s another point that stems from Sanders’ comments at the SMSF Association conference, specifically from his declaration that experience would not count towards professional education standards.
On this, he was right.
Experience is important for many reasons, but the point of this reform is to draw a line in the sand for education standards. It is not about making sure existing advisers are adequately experienced.
Years spent in the industry, while extremely valuable, have nothing to do with qualifications and cannot reliably be quantified. At the risk of sounding flippant, would three years as an authorised representative equal one unit of an approved degree? Would you concoct a formula that went something like: funds under management*number of years/number of clients?
The potential demise of older advisers, and the danger of losing their wealth of knowledge, represents arguably the most dangerous risk the reform poses. At the SMSF Association conference, Peter Hogan, the association’s head of education and technical, related this concern.
“My greatest regret will be if, at the end of this process, we lose the knowledge that experienced advisers have after 20 or 30 years of working in this industry because they can’t meet those standards or have no desire to do so,” Hogan said.
Personally, I’d much prefer an experienced adviser over a qualified one. But that is not the point.
Experience is not education, and the directive from the finance minister to fix education is clear. Calls to make experience count towards the new qualifications are unfeasible, ill-considered and, at this point, only detract from the real issues.
