With the education pathway consultation closing, both financial services ministers have doubled-down on the proposed degree carve-out, rejecting the notion it is a “watering down” of the industry.
The proposal would allow advisers with 10 years of experience with an unblemished record to remain in the industry without tertiary qualifications, but had received criticism from advisers who saw it as rewarding procrastination and a step-back from professionalism.
Speaking at Conexus Financial’s ‘The Policymakers’ View on Financial Services in 2022’ webcast, the minister for financial services, superannuation and the digital economy, Jane Hume, said advisers who commenced the requirements but now feel aggrieved should not see pursuing education as a waste.
“For those that have done the education requirements… I don’t think you should ever really feel sore about educating yourself and keeping up to date and becoming more professional, so I would hope no one would see that as a wasted opportunity,” Hume said.
The shadow minister for financial services and superannuation, Stephen Jones, said the education carve-out was not a “watering down” of financial advice, but what should have occurred right from the beginning.
“We shouldn’t be booting those people out of the door if they can meet an accredited recognition of prior learning process,” Jones said.
“It means we aren’t wasting limited resources in our tertiary sector, training people to get a piece of paper that proves they know stuff they already know.”
Stemming the bleeding
Appearing on the panel as a guest, AMP chief executive asked both ministers how they would stabilise adviser losses in the industry.
“One of the problems, as I see it, is the uncertainty about what the future looks like for [advisers], in terms of education, continuing professional development, mentoring and the structure of the business,” George added.
Hume said it was not necessary to “stem the bleeding any further” and that adviser numbers would now stablise post the 2021 exam deadline.
“The real question is how do we make sure we can bring that next cohort through, so we have a dynamic industry that is replenishing itself,” Hume said. “There’s a mass exodus of people leaving the industry and we always knew there were going to be people leaving the industry.
“We don’t want to discourage new people from this industry because it’s an important one and it’s not as if you get a lot of school kids saying they want to be an adviser when they grow up.”
Both ministers agreed that allowing those advisers to remain in the industry was a fair compromise that would retain a larger number of advisers in the industry, provide adequate mentorship to new entrants.
It also meant the traditional sales-focused business model for the provision of financial advice had collapsed and wouldn’t return.
“Neither Jane nor I want to go back to the previous model where sales and advice were conflated,” Jones said.
There can be and usually are, bigger picture issues that due to unforeseen or ignored events, requires adjustments that will upset what is going on at a micro level.
Higher education is a noble ideal and if what is being taught is relevant to and not in competition with what Advisers have been doing for years, then of course it is a positive and worthwhile pursuit.
However, when prior learning and experience was treated with contempt by vested interest groups whose profit margins are boosted by enforceable Regulation that throws out of the Industry those Advisers who were upset that they were being treated like criminals simply because they wanted their decades of REAL WORLD experience and prior / ongoing education to be given due respect, then the inevitable happened.
It took ten thousand Advisers to exit, the cost of Advice to dramatically rise and Life/Disability Insurance premiums to sky rocket, creating a crisis which has cost Australians multi Billions of dollars, that has created the light bulb moment where overzealous Requirements which increases costs, reduces available time to do your job and increases the risk of running your Business, also does not seem to be a positive model or path for aspiring new entrants to want to go down, hence the small number of new Advisers.
There must be some middle ground and allowing honest, experienced advisers who have a good track record to be allowed to continue doing what they have done for many years, is not a nice gesture, it is common decency and common sense.
Lawyers do 10 hours a year ongoing training. Financial Advisers do 40 hours.
Looking at the constantly evolving Regulatory world and constant increases such as the Corporations Act rising from 400,000 to 800,000 words, it would seem a natural progression that Lawyers should be forced to do many more hours a year.
Where does it all end?
The approved degrees omit a huge area of qualifications. Many in the industry went to Uni over 20 years ago when courses had a specific scope. So you did accounting or got a B.Comm if you were interested in finance and investments. However, there were many people who did an arts degree majoring in Economics etc and these degrees are considered to be appropriate. I am one such person. My studies were in communications but I have credits for economics and business economics. Further, my studies into group psychology have provided insight into market behaviour and behavioural finance. I have signed up for the Graduate Certificate in Financial Planning at UWS. However, further study is a cost to the business both in terms of actual costs and client facing time. Having been in the profession for over 30 years I believe that there should be consideration for the hours of CPD that have been accrued and the experience that has been gained. There needs to be some determination on the requirements as soon as possible so that planners can get on with meeting them or move along and attend to assisting clients and managing the business.
20 years as a planner, fully qualiifed with the new regime and disagree with watering it down.
I’ve written to the FAStandards@treasury.gov.au email address personally to say it shouldn’t be watered down, took five minutes
“We shouldn’t be booting those people out of the door if they can meet an accredited recognition of prior learning process,” Jones said.
This is a fair comment, but neither the ALP nor Government proposals include any accredited recognition of prior learning process.
The FASEA exam measures knowledge and application of the code of ethics and other advice regulations, but no skills in relation to areas of practice.
Both proposals require completion of an ethics unit, so that is assessed again.
But other than that, the only assessment of skill/learning is that the RG146 requirements were met prior to getting on the register in 2016. The RG146 requirements weren’t of a sufficient standard, which is why we require the higher education standards of new entrants.
“Neither Jane nor I want to go back to the previous model where sales and advice were conflated,” Jones said. – So Vertical Integration remains and an education carve-out introduced to any adviser who commenced prior to 2016 – surely I’m missing something?