A blanket requirement to complete a graduate diploma in financial planning understates the value of an adviser’s experience, the Association of Financial Advisers has said.
In its latest submission to the Financial Adviser Standards and Ethics Authority (FASEA), the AFA has attempted to quantify this apparent understatement of value.
The AFA submission states that 10 years of experience as a responsible manager of an Australian Financial Services licence should be worth four subjects of a graduate certificate for advisers without a degree who have a diploma of financial planning.
Meanwhile, the AFA argues, financial advisers who are 55 years old at the end of 2023 and have 15 years of experience should be entitled to stay in the industry with just four units of the graduate certificate under their belts.
These AFA suggestions are in response to the proposed FASEA standards that require existing advisers with no degree to complete an AQF Level 8 graduate certificate or other (AQF7 or above) pre-approved qualification.
“Experience brings many beneficial elements with respect to client relationship management and client understanding skills that are not learnt at university,” AFA chief executive Philip Kewin’s submission states.
The AFA started out as a representative body for the insurance industry but has broadened its member base in recent years, in line with the trend of insurance advisers branching into superannuation and investment advice. Kewin recently estimated that about 30 per cent of the association’s almost 4500 members are focused purely on insurance.
The AFA’s submission stated that the association does not believe the solution for minimum education standards for existing advisers should be based on them needing to start from scratch.
“We do not support the need for a graduate diploma, as this understates the value of experience and will result in unnecessary widespread industry disruption,” Kewin’s submission stated.
In contrast to the AFA’s position, Financial Planning Association chief executive Dante De Gori recently said publicly that FASEA’s proposals for education standards for existing advisers should go further and raise the specific education standards for financial planning.
De Gori said advisers with so-called related degrees in, say, commerce and business, should be on the same level as advisers with unrelated degrees such as nursing and teaching. The FASEA proposals give related degrees recognition for existing study.
Among AFA advisers, 54 per cent do not have a degree, a survey the association conducted of its membership in April this year found.
Meanwhile, 69 per cent of AFA advisers who declare they have more than 20 years of experience also do not have a degree.
These older, more experienced advisers are more likely to be business owners, the AFA states.
The AFA survey also found that 70 per cent of AFA advisers have done further study, including having completed the advanced diploma of financial planning or the older, eight-unit diploma of financial planning.
But 16 per cent of AFA advisers have indicated an intent to retire as a result of the reforms and more than 22 per cent are still undecided on whether to remain in the profession; among experienced advisers (20-plus years) within the AFA network, 60 per cent either intend to retire or are not yet decided.
