Tertiary providers have been left hung out to dry from the experience pathway after spending years investing in financial advice qualifications to help fulfill the professional standard.
The Minister for Financial Services Stephen Jones released draft legislation for the education carve-out for advisers with 10 years’ experience and a clean record which failed to include a sunset clause which was proposed by the top professional associations.
Integra Financial Services co-founder Deborah Kent, who worked on the board for FASEA, tells Professional Planner the universities put in tremendous work into designing advice courses that matched the requirements laid out by the authority.
“There’s an awful lot of work that went into it and what will happen is they’re not going to get the numbers now if this new pathway goes through for new entrants particularly,” Kent says.
“It’s a shame. Some universities have put together some really good courses that may not get the numbers. The commercial reality is do [they] keep running it?”
Candidly, Kent describes the carve out as a “step too far”.
“I truly get why people want an experience pathway but to allow somebody to just go through the gate with no extra education than RG146 which is four subjects is nonsense,” she says.
“I just can’t see how, if we want to treat ourselves as professionals, if we can allow this to happen where advisers with just 10 years’ experience and a clean record don’t have to do the ethics course.”
She adds that making it easier for advisers with experience to achieve the pathway is fair, but to have them do nothing waters down professionalism.
“Will it bring advisers back into the industry? I don’t know,” she says. “A lot of the advisers who have left couldn’t get through the exam.”
Long road to ruin
Reflecting on the path to education reform, Western Sydney University associate dean Michelle Cull was disappointed with the Jones’ proposal.
“I just can’t believe how far we’ve come and now it’s gone backwards,” Cull says.
She adds the experience pathway won’t make an immediate difference for how WSU approaches financial planning education. “Everything takes time. It’s not something we’ll rush.”
She notes for many universities including WSU, these qualifications were being offered before any education mandate.
“In saying that, we had to do a lot of work [for FASEA approval],” Cull says.
“We put a lot of resources into ensuring that our current programs met the accreditation requirements. For example, we had to have the compulsory ethics subject.”
Cull remains optimistic the degrees at WSU will continue but nothing is set in stone.
“I wouldn’t be able to say [definitively] until a review is done,” she says, referring to regular reviews conducted for all courses by the university.
“We have seen a big increase in the undergraduate pipeline. That’s been good for new entrants. For existing providers, there will always be advisers that want to do more.”
However, Cull notes there has been a lack of demand since the experience pathway was announced.
“A better way to put it is that we didn’t see the rapid increase that we were expecting,” she says. “A lot of advisers have held off.”
Culls hints there will be some higher education institutions impacted more than others.
“There’s a huge range in the cost of these additional qualifications,” Cull says.
“I have wondered how much that has played into the choice of what financial advisers will do, what they’ll study and where they’ll study. There can be big differences there.”
Kaplan Professional CEO Brian Knight alluded to comments made by the Minister that five million Australians need advice which must be serviced by the under 16,000 advisers left in the industry.
Knight understands why the Minister has kept his word on a pre-election promise. “With the experience pathway, I get it,” he says.
“We agree that they need to keep some of these people given there’s the shortages and departures, and slow uptake of new entrants.”
However, Knight says what has annoyed some advisers is the notion that experience can be considered part of the education pathway.
“It’s an exception to the education pathway because it shouldn’t lose sight of the fact the education is the core of any profession,” Knight says.
“When they say we are equating 10 years’ experience with a degree, that’s really wrong because it’s nowhere near it. Most of these people have RG146 which is the much maligned do it in a day program.”
Knight empathises with the advisers who committed the time, money and effort to “work their butt off”.
“They are really peeved,” Knight says.
“I get they have to fulfill the election promise, but what they’ve created at the moment is a win/lose. What they should do is give some more recognition to those that have [completed the education].”
While a 10-year sunset was rejected by the Minister despite support from the top associations, Knight described it as a “negative” response and suggested perhaps there is a way to show positive reinforcement for advisers who have pursued education.
Using an example of a 35-year-old who could hypothetically be eligible, Knight says the negative is they could be working for another 30-plus years without further education.
“If that person got recognition as they’re a higher-level adviser because they were education so when people went looking for advisers these are the guys that have a gold star. Then there’s an incentive for those people to do some education.”
The ASIC Financial Adviser Register records the qualifications a planner holds, but for consumers viewing it via the MoneySmart website it does not feature any prominence.
Wealth Data founder Colin Williams, who received data from ASIC showing 40,000 consumers a month accessed the website, also noted it doesn’t adequately differentiate approved degrees.
Cull says she hopes advisers will continue to pursue study because she has found it is valued by consumers.
“At the end of the day consumers are going to be able to see qualifications on the register, she says. “Based on my research, consumers want to go those that have qualifications.”
Despite the criticism, Cull, Knight and Kent all supported the proposals to allow the Minister of the day to use their discretion to approve degrees for new entrants, as well as allowing advisers who are registered tax agents to no longer meet the additional education requirements to be a qualified tax relevant provider.
“That’s a no brainer,” Knight says, referring to the Ministerial discretion. “The courses were done by FASEA so inflexibly and so rigid it was just knocking out people.”
Kent supported the proposal but stands by the work the FASEA board did to approve new degrees during their tenure.
“There are elements of degrees that probably could be approved back in our [FASEA’s] time but we didn’t – we stuck very closely to what was financial planning,” Kent says.
“Personally, we put a lot of work into approving these [degrees] – the perception is that we didn’t – but I stand by the fact we put a lot of work into it. If you’re going to be approved for a financial planning degree, then it has to look and feel like that.”
Kent points out FASEA was required to follow the guidelines laid out for the authority and the degree mandate had a strict focus on financial planning.
“If someone has a degree that deals with only financial markets, but doesn’t deal with superannuation, estate planning, insurance… then can you call it an equivalent?”
Knight laments that the education sector perhaps didn’t do enough to push for a better regime.
“The previous government asked educators to come up with an education solution for advisers,” Knight says. “We had a rigid eight-subjects to form a degree. We should’ve been smarter about that.”
Cull says when the education standard was announced the government instructed providers to give credit for certain things, like CFP accreditation.
“It’s almost like we were told what we would give credit for,” Cull says.
“What’s disappointing is that from the outset, if it had been structured differently, this work experience requirement would’ve been able to be dealt with back when the legislation went through because that’s what universities do.”