Eugene Ardino (left) and Sarah Abood

To better recognise the progress being made in the advice profession, the Professional Planner Advice Policy Summit will argue the case for the policy levers that should be pulled outside of what was promised in the Delivering Better Financial Outcomes.

The event, held on 10-11 February at Old Parliament House in Canberra, ACT, will bring together the industry’s most influential voices to drive the policy agenda for the profession.

Much of that discussion will be centred around the long-awaited Tranche 2 of the DBFO as the industry hopes to see draft legislation before an election is called.

But outside of the DBFO, there are several policy changes that fell outside the reform’s purview, and a session on day two of the summit will discuss why some of these under radar changes are necessary to bring back to the fore.

Among these changes, Lifespan Financial Planning chief executive Eugene Ardino suggests that broadening the types of relevant degrees for future financial planners and relaxing continuing professional development (CPD) requirements could help make the profession more attractive to young people.

“I think we will get a lot more people considering financial planning, if they can do a degree that would give them the option to do financial planning but potentially give them the option to do other things,” Ardino tells Professional Planner.

“I fully support…to make it so that you can do a broader degree, like a commerce degree or an economics degree, and there’s probably lots of others with a financial planning component.”

The Financial Advice Association Australia, along with the SMSF Association and Stockbrokers and Investment Advisers Association, have campaigned to expand the education pathway for financial advisers.

FAAA chief executive Sarah Abood says more flexibility at bachelor’s degree level would increase the number of new entrants.

She points to the three universities that closed their financial advice programs last year – University of Wollongong, Queensland University of Technology and University of Tasmania – as evidence the education pathway for new entrants has only grown slimmer.

Abood expresses frustration regarding the lack of data available about the number of potential new entrants. While adviser departure numbers are available to see, the same data is difficult to gather for the number of students entering into financial advice degrees.

“Universities aren’t providing that data of how many students starting financial advice degrees so how are we supposed to know,” Abood says.

CPD requirements next priority

The current CPD requirements for financial planners of 40 hours a year is likely off-putting for young people, as well as inconveniencing active financial planners.

Former Minister for Financial Services Jane Hume had expressed interest in reviewing the hours required, but an election loss and differing priorities from the incoming government set that aside.

Ardino argues the issue is not the number of hours required but what the hours entail – because advisers attend several events to fulfill the requirements, they often end up doing around 50 to 60 hours.

“40 hours is probably okay, but perhaps reducing some of the specific areas that you need to do,” Ardino says. “[It’s] very tedious to make sure that you get to all of it.”

Furthermore, many of the training hours are spent studying ethics and meeting the required ASIC areas rather than focusing on the technical side. Ardino suggests some of that time “might be better spent keeping up with technical rules, whether it’s insurance or superannuation”.

Abood expresses frustration about the inconsistency of the CPD requirements – especially how many hours are spent on ethics.

“Why do advisers have to do nine hours of ethics and five of everything else? We think everything should be five hours,” Abood says.

The inflexibility of the CPD requirements, particularly when it applied to part-time workers and workers moving licensees, was another concern for Abood. Despite working much less time, part-time workers must do 36 hours – only 10 per cent less than a full-time adviser.

Furthermore, workers changing from a licensee operating under the calendar year to a licensee operating under the financial year have to rush to catch up. Mothers also struggle under the CPD requirements.

“We’ve seen a decrease in women in the profession because mothers can’t fulfill the requirements,” Abood says. Roughly 23 per cent of advisers in the profession are women.

Relaxing the CPD requirements would not only be beneficial for advisers but make the profession more attractive to young people.

“It’s not just about making it easier,” Ardino says.

“It’s making it attractive for potential new entrants…that’s the big issue here, we’re just not getting enough new entrants.”

Code of Ethics further down the list

The Code of Ethics became a legal obligation for financial advisers at the start of 2020 which has long been challenged by the industry over the ambiguity of the wording of some of the standards as well as overlapping with the Best Interests Duty in the Corporations Act.

FASEA – the now-defunct standards authority responsible for administering the Code of Ethics – consulted on re-wording the “not workable” Standard 3 of the code, but this fell off the radar with an election called in early 2022.

Minister for Financial Services Stephen Jones told Professional Planner during the QAR consultation process that the review of the code would be done at the conclusion of the advice review, which Michelle Levy acknowledged in her final report.

While the code certainly needs to be reviewed, Abood says it does not take precedence over other reforms such as the DBFO reforms.

“We need to see what DBFO does before making changes to the code,” Abood says.

Ardino agrees that while reforms to the code are warranted and “it could be a lot clearer”, some of the current reforms underway “are probably more important”.

“We’ve had it in place for quite a while now, and I think the community has just sort of got along with it and learned to live with it,” Ardino says.

“I’d like to see a review, perhaps shortly after we get through the DBFO Tranche 2.”

Foundations essential

While promoting the profession in universities and producing digital campaigns are good steps, ultimately students will do their own research and may be deterred by the industry’s instability and heavy compliance.

If the profession focuses on meaningful regulatory changes, it will naturally find more stability – essential to attracting new entrants into the profession.

“We probably need to spend three or four years making the community feel more stable, less hostile towards practitioners who make mistakes and just make it a more attractive environment for someone who’s thinking about a career to go into,” Ardino says.

“If we ignore that, all the campaigning in the world won’t get enough new entrants to come and consider financial planning.”

Professional Planner will be hosting the inaugural Advice Policy Summit at Old Parliament House, Canberra, on 10-11 February. 

One comment on “Putting forgotten regulatory initiatives back on the radar”
    Todd Walters

    Some valid points and well, some contradictions too. Broadening the type of relevant degrees – yes. And nine hours of ethics CPD a year was always considered by everyone (excluding FASEA) as overkill. But reducing CPD requirements to accommodate part-timers assumes that part-time financial advisers have fewer professional development needs, when in fact, all financial advisers, regardless of hours worked, require the same opportunities for growth and skill enhancement to maintain high standards in their roles. This is the same for fire-fighters and well, doctors who parts of the industry liken themselves to. Fire fighters must meet the same level of training, performance, and competency to ensure safety and effectiveness in emergency situations. Doctors must meet the same clinical and ethical standards to provide safe and effective care to patients. The key difference is typically the number of hours worked, but the quality of care and the expectations for competence, training, and professional development remain the same. If you want to make life easier for new entrants and existing advisers, and practice what you preach, then why not allow financial advisers to self-regulate and choose their own CPD rather than limiting them to have to seek out “accredited CPD”. It’s the 21st century and when, for the past decade CFP professionals and Associate FP’s are consistently achieving above 95% compliance in the CPD audit each year what further reason is there to continue to mollycoddle them?

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