In what is likely to be one of his last significant financial advice reforms before leaving Federal politics, Minister for Financial Services Stephen Jones has unveiled proposed changes to education standards for financial advisers aimed at smoothing the way for more new entrants to the profession.
A major stumbling block in attracting newcomers to the profession has been the need to complete a specialised financial planning degree to gain entry, which Jones now intends to do away with and instead open entry up to anyone holding any bachelor’s degree or higher qualification.
The requirement to complete a specialised degree had been widely seen as discouraging not only school-leavers but also individuals already established in other fields from changing careers to pursue financial advice, and contrasted with other degrees, such as accounting or economics, which allowed graduates uncertain of their final career plans to potentially work in a range of industries and corporate settings.
Jones told the Professional Planner Advice Policy Summit on Canberra on Monday that the changes to education requirements will “continue to recognise the important role of tertiary education” in setting and maintaining education standards in the profession.
“Under our proposal, individuals will be able to hold a bachelor’s degree or higher degree in any relevant discipline,” he said.
“Prospective advisers will need to meet a minimum study requirement in financial concepts such as finance, economics or accounting. This means firms will be able to attract graduates with degrees in economics, commerce and finance, amongst others.”
Jones said new advisers will still be required to complete core, prescribed accredited financial advice subjects covering ethics, legal and regulatory obligations, consumer behaviour and the financial advice process.
“This creates a better pathway for career changers, who will be able to enter the industry later in life,” he said.
“For example, somebody with a commerce degree may only need to do the financial advice components, because their core degree has already dealt with a range of the finance industry issues that would otherwise be dealt with in a specialist degree. [There is] no point in making somebody study the same thing twice.”
Jones said the new requirements would be “complemented by the remaining standards that advisers need to meet, namely the professional year, the financial adviser exam and ongoing education requirements”.
“The cost and time to meet the requirements under the new standard will be halved for most students studying a commerce, economics or finance degree,” he said.
“It will be halved for people moving across from other financial services careers.”
Existing advisers have until 1 January 2026 to comply with the degree-qualification requirement. Jones said he recognised that “some advisers have followed the current pathway, and I respect the hard work that they have done to enter the profession which is not going to be taken away from them”.
However, he added that “the status quo is unsustainable and without change, the profession will hit another crisis point, all while the demand for advice is only to go going to go up because five million Australians are either at or approaching retirement”.
The changes also aim to co-ordinate with the education requirements of the new class of adviser, introduced under the government’s Delivering Better Financial Outcomes legislative reforms.
“We will also ensure that the education requirements for the new class of advisers will be aligned to creating another logical entry point and pathway to professional advice and a career as such,” he said.
“This is all about keeping the pipeline of prospective advisers open as wide as possible for as long as possible.”
Following the introduction of new education and professional standards the number of practising advisers declined precipitously, from a peak of around 28,000 to around 15,600 today. The profession has failed to attract newcomers to its ranks at anything like the pace of departures from it.
Jones told the summit “the implementation of the requirement for financial advisers to hold tertiary education qualifications frankly wasn’t well handled”.
“Long-time advisers who had diligently acted in their clients’ best interests, were told to go back to university, or find a new line of work,” he said.
“Unsurprisingly, advisers started leaving the industry in their droves. Not every exit was a tragedy. But plenty of good advisers felt that they had no choice but to abandon their work life that they had dedicated many years of dutiful and competent and confident service to. This was a genuine crisis point for the industry’s viability.”
Jones said Labor made a commitment before the last election to “introduce a new pathway for experienced advisers with a clean record to remain within the industry and, upon coming into government, we acted quickly to legislate this reform”.
He said around a quarter of advisers still in the profession had taken advantage of this so-called experience pathway.
“If you think the problem is bad today, 4000 [more] advisers would have exited the industry had we not put this into place,” he said.
