Stephen Jones this week annnounced Labor would repeal legislation mandating equivalent relevant degrees for existing advisers in an election promise designed to sacrifice a small margin of heightened professionalism in favour of increased access to advice.
The shadow minister for financial services and superannuation this week said if voted into power at the next election, Labor would allow advisers with 10 years of experience an exemption from current legislation – brought in during the Kelly O’Dwyer era – requiring them to qualify for the equivalent of a relevant degree.
“If you’ve been working for a decade as a financial adviser with a good record, a Labor government will not ask to you take that bachelor’s degree to keep your qualifications,” Jones said. “We’re going to assume that that ten years plus experience is worth at least a degree.”
While the shadow minister fluffed on the requirement – existing advisers are required to undertake a graduate diploma at most, not a bachelor’s degree – he made clear his intent to pave the way for experienced advisers to remain within, or return to, the industry sans extra training.
“Amongst egregious injuries Scott Morrison has inflicted on your industry, the most painful has to do with professional training,” Jones said. “Requiring financial planners with years, even decades, of experience to complete a bachelor’s degree or lose their licence doesn’t make sense.”
Under the shadow minister’s plan advisers will still be required to pass the exam, abide by the Code of Ethics and fulfill continuing professional development requirements.
The proposal has the potential to stem the tide of experienced advisers exiting the industry and subsequently create more avenues for consumers to access advice, which is sorely needed in the pandemic era. With more advisers in the industry, the pressure on pricing could ease off.
It would also ease concerns about the lack of experienced mentors for young advisers.
The trade off, however, would be that consumers lose the right to trust that every financial adviser is at least educated to bachelor’s degree equivalence. The need for that trust was why the Financial System Inquiry originally recommended the reform.
In a step backwards for standards and the industry’s journey to professionalism, advisers that have been practicing for ten years with only a financial planning diploma would continue providing advice.
Clearing the way
Questions will be asked about why Jones only introduced the policy at this late stage, when many of the older advisers without a degree have already either left the industry or have prepared to do so in the lead up to the January 2026 cut-off date, which was originally set for early 2024.
(The shadow minister has been unafraid to go on a limb with advice policy planks in the past, including his contempt for insurance advice commissions.)
The policy could also irk experienced advisers who have gone to the effort to complete their bridging courses, only to have the requirement dropped for their peers who declined the opportunity.
The methodology behind the 10-year benchmark will also need to be justified as more than arbitrary. Why not 8? Or 12?
According to Jones, the reasoning is less important than “clearing the way” so advisers can “get on with the job”.
“At the end of the day, though, the ‘why’ doesn’t matter,” the shadow minister said. “What matters is getting this issue fixed, getting your industry back on its feet and, most importantly, making sure Australians get that advice.”