The majority of advisers are tertiary educated – just not with qualifications approved under the FASEA education standard, research from Wealth Data has found.
Analysis of the ASIC Financial Adviser Register found only 17.5 per cent of advisers have a FASEA approved qualification, but 61.8 per cent of advisers have a degree.
Wealth Data director Colin Williams tells Professional Planner attention will now switch to the next phase of the education standard which requires tertiary qualifications.
“What happens now is all the advisers will need to be on track to achieve that. That section of the FAR is relatively new and used to be called the FASEA approved qualifications. People would throw anything in there but now it’s becoming stricter.”
As advisers are passing exams or getting their past studies approved, Williams says, they’re now filling in that component.
“I’m not convinced it’s 100 per cent correct but what I am convinced is that it’s becoming an important issue.”
The FAR has separate boxes for qualifications and training which meant advisers could include all qualifications as well as relevant ones.
“If someone’s got a degree in media for example, it might not have much to do with financial planning but they might have it in there and that demonstrates they’ve got the ability to get a degree,” Williams says.
The rate for approved degrees is logically expected to change closer to the education deadline, but this is dependent on the experience pathway which is currently being assessed by Treasury.
Regardless, Williams says attention will be diverted towards achieving the education results.
“The FASEA exam which has been the focus is now coming to an end. This is now going to be the main game. This is where we’re at today; this is our starting point.”
Super funds leading the way
Super fund advisers have a much higher FASEA qualification completion rate with 39.1 per cent, which Williams attributes to a greater emphasis on keeping their details up to date.
“Across the board their membership rates are high, their degree rates are high and now it’s the approved qualifications that are reasonably high. They tend to have that focus on making sure all the boxes are ticked.”
Super funds had an advantage, Williams says, as they gained a lot of the advisers that departed from the banks.
“When the banks recruited heavily in new advisers, the super funds sat back and just picked a number of bank advisers to fill in their positions when the banks pulled out. They had a strong opportunity to get quality advisers in terms of their qualifications. When we used to do similar measurements around the qualifications, the banks tended to do quite well.”
Clean and tidy
While data on the FAR isn’t 100 per cent accurate as it is incumbent on advisers and licensees to update it which incurs a fee, Williams says the register is much cleaner than it used to be.
“The bigger groups tend to keep it up to speed because they’ve been hit too many times so they’re not going to take any chances.”
He added that it’s in the best interest of advisers to make sure the FAR is an accurate depiction.
“If you got on the MoneySmart website and look up a financial adviser it will tell you if they have an approved degree or not, so you’re crazy not to update it. You’d be shooting yourself in the foot because you don’t know how many referrals you’ve missed out on. All the licensees have been kicked up the ass so many times, they’ll be checking with advisers that everything on the FAR is correct.”