Overshadowed by the plan to give leniency to experienced advisers under the education regime, another proposal in Treasury’s education consult could see FASEA-approved degrees become less relevant in exchange for a post-graduation specialisation.

The Education Standards for Financial Advisers policy paper was released by Treasury in late December which sought feedback on the proposal to exempt advisers with ten years of experience and a clean compliance record from FASEA’s equivalent degree requirement.

Included in the Government’s consultation to match the proposal made by the opposition was a change to the new entrant education standard: FASEA-approved degrees could become broader, with the caveat that professional year entrants were required to undertake AQF8 level study – a graduate diploma or certificate.

The PY was a requirement that came into place in 1 January 2019 which required provisional advisers to undertake 1,600 hours of work, including 100 hours of structured training.

The consultation paper asked: “Whether the professional year standard (set out in the Corporations (Work and Training Professional Year Standard) Determination 2018) should be amended to require additional study at a graduate certificate or diploma (AQF8) level to complement the broadening of the relevant fields of study.

“These could be done in a specialised area of the licensee and new entrant’s choosing, allowing the professional year candidate to develop a deeper knowledge alongside their practical training.”

Treasury’s amended proposed education pathway meant financial advisers would still need to complete up to eight units, but these units could be completed “across broader fields and specialisations”.

“As per existing settings, to complete a bachelor’s degree, a financial adviser will need to complete 24 units,” it noted in the consult.

“To complete an eight-unit graduate diploma, a financial adviser will need to meet the entry requirements of the education provider which will be either that the adviser has completed a bachelor’s degree or have a certain number of years of experience.”

Phil Anderson, Association of Financial Advisers chief executive, said the proposal was a point of concern.

“With the proposal to move away from FASEA-approved undergraduate degrees to a requirement for a degree that includes eight subjects in the nominated relevant fields, the new advisers who might qualify to enter the profession of financial advice, would be doing this with significantly less specific financial advice knowledge,” Anderson said.

“For this reason, the expectations for the professional year would need to change significantly to ensure that they had the foundation level of knowledge on financial advice.”

More obstacles

Given the low amount of provisional advisers that had joined the industry, it could create another obstacle for the industry which was having difficulty recruiting.

“We are concerned about the implications of this as it would mean that these new entrants would be less employable in a financial advice practice and thus make it even more challenging for small business owners to employ them,” Anderson said.

“It might be that some kind of bridging course would be required, however it is also noted that it would be more likely that new entrants would transition through customer service and para-planning roles before they could be considered for a professional year opportunity.

“From a practice perspective, it would probably make better sense for the further study to take place before commencing the professional year, rather than as part of it.”

Ben Marshan, Financial Planning Association of Australia head of policy, strategy and innovation, said the FPA had been comfortable with the education part of PY and did not see why it needed to be changed.

“Fundamentally all of these proposed education changes should be considered in the context of Treasury’s Quality of Advice review, not changed at this point when it isn’t clear whether they have or haven’t achieved the desired outcome of raising the professionalism of financial planner and improving access to professional financial advice for consumers,” Marshan said.

“Specifically in relation to PY education, we don’t think enough new entrants have been through PY to assess whether the education they do during PY is of enough quality or too little at this point.

“There is nothing stopping them doing AQF8 subjects at the moment, but there is also sufficient flexibility that where they are their supervisor identify a non-AQF course of quality which they would benefit from, they could do this.”

3 comments on “Associations concerned over PY education changes”
  1. Avatar
    Jeremy Wright

    Hi Peter,
    I retired as an Adviser last June, though my son Brett, who is also a Director in our Businesses, has stayed on as an Adviser.
    I am still actively involved in everything that is occurring and we are working closely with many interested parties to bring about some positive changes, so Advice practices will be able to provide risk advice in a profitable manner with less stress and be able to cut down their time and compliance burden which has been a cause for many Advisers to cut back on providing Life/Disability advice services.

    All the best for this year and let us hope life can get back to some sense of normality.

  2. Avatar
    Jeremy Wright

    The objective of the Quality of Advice review and desired outcome of raising the professionalism of Financial Planners and improving access to professional financial advice for consumers, appears to be having the, “for every action, there will be a reaction” affect.

    On the one hand, all this additional required study and Regulatory requirements, is creating more theory based knowledge, though has led to over ten thousand Advisers exiting the Industry, a trickle of new entrants and a hesitancy for practice owners who are already snowed under with complying, then trying to find the time and resources to bring on and train new Advisers.
    The Advised Life Insurance sector is in trouble, as it has become too hard to specialise due to most of the education requirements having NIL bearing on the work risk specialists do.

    It is a great idea to have specialist training by separating risk advice from Investment advice, which could then allow holistic Financial Planners to bring on risk specialists into their Business, without forcing them to do irrelevant study, to help bring the cost and time down to make it feasible.

    Why is no-one asking the obvious question, or even wondering why Insurance advice has become too hard and very little is being done now in this very important space?

    The answer is staring everyone in the face and if the Government, Treasury, the Regulators, Associations and all other interested parties found the time to ask Advice practice owners why is this the case, then the above is both the reason and the answer to fix this issue.
    Or, we can just continue to watch the Advised Life Insurance sector continue it’s downhill slide, watch more advisers leave, insufficient new advisers enter the Industry and Life / Disability premiums continue to rise to the point where clients cancel and the spiral continues.

    1. Avatar

      Hi Jeremy,

      I remember an interview you did a year ago stating you wouldn’t be an adviser post January 1st last year.
      Are you out or still in …and if so what has changed your position?

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