While opinion on the proposed carve-out to education standards remains divided, a growing cohort of advisers are speaking out against the move via submissions to the government’s consultation on the scheme.
The ‘experience pathway’ proposal, originally put forward by Labor’s Stephen Jones and then the government just days later, seeks to stem the flow of advisers leaving the advice industry by exempting those with 10 years experience and a clean record from the equivalent degree requirement.
The proposal angered many advisers who see it as not only a major step backwards on the industry’s journey to becoming a profession, but as rewarding the inaction of those who haven’t satisfied the requirement.
Such is the ire, many are now putting pen to paper.
“Advisers are tangibly angry about this,” Melbourne adviser Jordan Vaka tells Professional Planner. “For this to be dropped on us now is infuriating.”
Vaka’s submission to Treasury makes the point that the proposed carve out doesn’t actually solve either problem of advice affordability or availability.
“By carving out yet another loophole to allow uncommitted advisers to keep operating, we are just kicking the can down the road,” he writes. “What use is it to maintain ‘supply’ when the cost of doing so is compromising on fundamental standards?
“This only benefits a small number of advisers who didn’t want to play by the rules, not the majority who’ve done the work,” Vaka says.
A backwards step
Perth adviser Ray Ong agrees that the proposed carve out “will not stop the exodus of financial advisers”.
“There are many more reasons why advisers are leaving,” he writes in his submission, noting that the removing the requirement to produce written Statements of Advice would be the “quickest and most impactful” way to reduce the cost to serve.
Apt Wealth Partners director James McGregor says watering down the education standards at this point would “diminish the effort advisers have put in” to meet the new standards.
“The bottom line is the whole industry has been going through a significant period of transition and this is the final piece of the puzzle to demonstrate to the community and the regulator that a financial planner is qualified and has gone through the various steps to call themselves a professional,” McGregor says.
“Any softening at this point would be a backwards step in terms of getting us to the end goal.”
Canberra adviser Michael Miller tells Professional Planner the carve-out will amount to an erosion of trust for consumers looking for surety from the sector.
“What the common standard allowed was that any consumer thinking of going to a financial planner could have an expectation that an educational standard was met,” he says. “There’s some link between that perception and trust.”
In his submission to Treasury, Miller argues that instead of making advice more affordable, diluting the standards and creating doubt in the minds of consumers will actually make advice more expensive.
“Low trust… serves to further harm accessibility of advice because the process of building trust with each prospective client on an individual basis takes time for a financial planner, which results in a higher financial cost for the advice process,” he writes.
Miller suggests a compromise in his submission, whereby advisers still need to complete an 8-unit equivalent degree in a related field of study but advisers receive two units of study for every ten years of experience – capped at four units and 20 years.
Under this hybrid model there would also be a widening of the related subjects for the qualification pathway.
“The combined model reasonably satisfies a consumer’s expectation that a professional financial planner has undertaken a level of formal study in their field of practice, with the flexibility for existing advisers to study topics that are relevant and complimentary to their practice,” he writes.