A pair of education providers has argued the education standard for so-called “qualified advisers” should remain high, with one suggesting maintaining a bachelor’s degree.
Minister for Financial Services Stephen Jones unveiled his version of a two-tiered advice model based on the Quality of Advice Review recommendations at the end of 2023. A first tranche of reforms passed Parliament earlier this month and consultation on the next tranche of legislation – including education standards for qualified advisers – is expected in coming weeks.
Kaplan has suggested a higher education diploma qualification, which would cover the first year of a bachelor’s degree and help streamline the entry of qualified advisers into a relevant degree course.
Kaplan CEO Brian Knight tells Professional Planner with the first tranche of legislation having passed, the industry needs to have a frank discussion about tranche two and what the education standard for qualified advisers should be.
“We liked the idea of it because it does a lot – for those people already working for super funds who have probably done some tier one subjects, they can probably get some credit into it,” Knight says.
“It gets a nice segue into full advice. Because in the higher ed diploma they do subjects that they could then [use if] they went into full advice.”
In the first episode of the relaunched Shape of Advice podcast, Jones says he is “focused on” getting the right qualifications and obligations sorted.
Industry associations have already made their own suggestions. The Council of Australian Life Insurers (CALI) revealed to this publication it has already pitched a Certificate IV to the Minister, which is below diploma level, but with the caveat it would apply only to qualified advisers employed by insurers.
“We saw CALI saying it should be a Cert IV and we looked at that and thought that’s lower than RG146 and that’s not acceptable,” Knight says, referring to the antiquated education regime which former Minister for Financial Services Stuart Robert claimed to have completed in a weekend.
In contrast, the Financial Advice Association suggested a graduate diploma, which often requires an undergraduate degree, but CEO Sarah Abood said super fund employees with work experience would be accepted to undertake study due to recognised prior learning.
“We looked at those and thought from our perspective we think grad cert is fine but it’s much higher than a diploma which is what the minister had mentioned,” Knight says.
“People working for a super fund wouldn’t get in unless they had some sort of qualification because it’s a postgraduate qualification and it wouldn’t allow people to transition quickly into it.”
For these reasons, Knight says during internal discussions the education provider “kept coming back” to the higher education diploma as the most realistic option.
“The unis could do that quite quickly,” Knight says. “Places like us would have to [apply to] get it approved, but we would.”
Conversely, Western Sydney University associate professor Michelle Cull argues a harder line should be taken, with a full relevant degree required for qualified advisers.
“If we go too far away from the approved degree standard, we’re going to find not only is the advice not in the best interests of the clients but it’s also going to stop potential financial advisers,” Cull says.
Cull and Knight acknowledge they will be viewed as having a conflict of interest on the topic as they are education providers, but they both believe it is important for the advice profession to have a high qualification standard, even for “qualified advisers”.
“If you’ve got a different type of qualification that doesn’t meet all those requirements, it makes it much harder than for someone to transition into a fully-fledged financial adviser,” Cull says.
“I’m holding the line that it should be a degree.”
Logically, this may seem like an encumbrance to boosting new entrants since it presents a higher barrier to entry, but Cull says this is a more enticing pathway for school leavers who have gone straight to university and lack the life experience to deal with pre-retiree clients.
Cull’s proposal aligns with the intent of Abood’s suggestion to keep super funds from relying on school leavers and backpackers to fill roles requiring limited qualifications.
Although Cull’s position doesn’t solve the issue of getting more new entrants into the profession, it does help support the pathway for younger, provisional advisers, which is uneconomical for most advice businesses.
“They might be able to be a financial adviser, but in terms of the role they’re actually undertaking for a business, they’re not likely going to be given a lot of responsibility until they have more experience,” Cull says.
“It’s a good pathway for those school leavers to work out what area they want to get into.”
Cull also dismisses the idea there isn’t a solid pipeline of financial advice students coming through the university. “The pipeline is there,” she says.
“We’re finding a lot of students who have just finished law, business degrees, now going on and doing the master’s degree in financial planning. From my perspective, we’re not really losing that pipeline.”
She says the issue is once those students have completed their qualifications, they’re in high demand from other professions and are not as interested in pursuing advice.
“In our course, students end up with an accounting degree and financial planning degree, so they have a lot of choice,” Cull says.
“It’s a matter what they’re being offered when they leave and knowing where to go. With accounting it’s a clear pathway but for those who go into financial advice, they need to have a little bit more flexibility in terms of the sorts of experiences they can get.”
What would be the chances of an experienced adviser in the industry for 30 years who is currently working under the experience pathway, getting a job at one of these super funds as a qualified adviser?
You’d think that person would be snapped up – but apparently not – the piece of paper will prove a more reliable way to be a “qualified adviser” than three decades of experience? Is that correct?
What a funny industry we are.
Always backflipping, lowering standards again and even cannibalising ourselves at times.
The JAWG working group has suggested that education going forward contain the following key elements:
• Five core knowledge areas with a further three elective knowledge areas to be chosen from a broad list that recognises different streams of financial advice. Examples of elective knowledge areas could include SMSF Advice, portfolio management and aged care.
• The ability to complete study units across multiple programs that can be supplemented by bridging units either contemporaneously or later if required.
• The curriculum is to be set and maintained by a broadly representative advisory group, including representatives from associations and academia.
Now we have CALI wanting just a Cert IV qualification introduced.
These all sound like RTOs again with tick the box education modules that were rampant post FSR and led us through the many enquiries where professionalism and education standards were held to account by the many reviews and even a royal commission, which led to FASEA education standards being imposed. Yet now we also have experienced pathways, as well as Qualified advisers and we are yet to see their education requirements.
We now have a smaller number of tertiary educators offer financial planning studies, with many already reducing their courses as a result of the experience pathway coming into play.
It’s taken the industry over 20 years to get universities to have approved and recognised Financial Planning qualifications, yet with a stroke of a pen, we have now seen such courses being closed or with smaller intakes.
Unfortunately, we have always been an industry of carveouts and grandfathering, all at the expense of professionalism and education standards.
All “carve outs and grandfathering” do is to distort the true education standards of the industry, stifle any inroads to professionalism, and allows all the regulators, and vested industry groups to decry the lack of professionalism and education standards when there is one of the many reviews that seemingly occur at regular intervals, which inevitably leads to more compliance, more regulation and in recent times, the Fasea exam and education standards, and the cycle continues.
Vertical integration, banks, sales models etc were the past main causes and who to say the future causes may still be vertical integration from the industry and super funds giving advice, or MDA providers perhaps and from the lower educated depending on what is finally approved.
The restricted term “Financial Planner etc” was brought in for the primary object was to restrict this to those authorised to provide financial advice and be listed on the ASIC register and also for consumer protection.
QAR and Minister Jones will be allowing Super funds etc will be able to provide scoped, scaled, or limited advice, if they meet the criteria above.
They will be able to use the restricted term as well or the new “Qualified Adviser “ term.
The restriction of the term should only be for those that are on the ASIC register and fully meet what was the Fasea education standards.
Otherwise, we are back to the handout of CFPs again from past times where no one can tell the difference especially the very people where the protection is needed being the consumers.
If there is a planning group created that will be factored around the experience pathway, then they should not be allowed to use the restricted terms.
Otherwise, it will all end up like the CFPs again where we can claim the same level, but the disparity is confusing and wide.
And when there is an issue, we will be grouped as “financial planners”.
This is like Paralegals, conveyancers, and clerical staff all being grouped as lawyers.
Surely the profession can come up with appropriate categories for all the proposed subsets and separate what the restricted term was meant to be for.
By all means be a Cert IV risk something, but you cannot be a Financial Planner. Likewise for a Super fund call centre console operator.
Let’s keep the Financial Planner restricted term for those that have met the FASEA education standard so there is a level to aspire to for those that choose or want a professional pathway.
Universities arguing that everybody should have a degree. How refreshing.