(Clockwise, from top left) Jenny Brown, Deb Kent, Helen Morgan-Banda and Ben Marshan

Stakeholders are voicing concern that Labor’s proposal to repeal existing education standards and exempt advisers with ten years experience from the equivalent degree requirement could stall the industry’s journey to professionalism and undermine consumer trust hard won in the wake of the Hayne royal commission.

Since ALP shadow financial services minister Stephen Jones announced the party’s plan to roll back the education standards, debate has flared around the merits of carving out the degree requirement for experienced advisers.

The proposal does have the potential to alleviate the adviser exodus. Only around 19,000 advisers are on ASIC’s register, down from a (somewhat artificially inflated) high of 30,000 at the end of 2018.

Stemming the tide of experienced advisers leaving the industry would also leave more mentors available for young advisers to learn from, create more avenues for consumers to access advice and likely reduce the cost to provide it.

A detriment to advice

The price of carving out the degree requirement could be steep, however.

“Winding back the education standards now would be a detriment to the advice industry becoming a profession,” says Deborah Kent, a 34-year adviser at Integra Financial Advice, former president of the AFA and director of FASEA. “It would also reduce the consumer trust in advice that the legislation was aimed at fixing.”

The education requirement was introduced by ex-financial services minister Kelly O’Dwyer after Financial Services Inquiry and Parliamentary Joint Committee reports said standards didn’t fit consumer needs or expectations.

Creating a loophole for experienced advisers to dodge the degree requirement now would create a two-tier system, Kent argues, which would leave consumers unable to discern whether they’re licensed adviser is degree qualified or exempt.

It would also undermine the work done by advisers who have attained an equivalent degree, she says, who could no longer say they’re part of a legitimately qualified profession.

“Suggesting that someone who has 10 years’ experience and is RG146 qualified should have the same status as advisers who have met their education requirements should not be tolerated by the advice community,” Kent says.

According to 30-year JBS Financial adviser Jenny Brown, suggestions that opposition to the proposal is coming from “elitist” young advisers is off the mark. Most experienced advisers want to retain the higher standards, she says.

“I take offence when I see headlines calling those of us who what to improve ourselves and our profession as ‘elitist’,” Brown says. “I know many advisers who are older than me who have also passed both the exam and completed their additional study and while none of us really wanted to do this, we needed to ensure we keep up with what clients and consumers at large believe a professional adviser to be.”

According to Perth adviser Craig Prosser, the ALP’s proposal is a “big backwards step”.