In its response to the FSI report last month, the government said it will introduce legislation to raise adviser standards by mid-2016 as well as “consult on appropriate transitional arrangements”.
When laid out, those details will be crucial for more than half of advisers who, according to ASIC records, do not already hold a bachelor’s degree. Records show that out of about 22,000 registered advisers, only around 9,000 have a degree while 1,500 hold a master’s degree and 13 hold a PhD or equivalent.
The other 11,000-plus advisers without a degree have earned a range of financial certifications and accreditations – including an advanced diploma in financial planning – with a majority bearing more than one.
It should be noted, however, that there may be some advisers who did not list all of their academic achievements on the ASIC adviser register.
Speaking to ifa, Mark Rantall, chief executive for the Financial Planning Association of Australia, said these figures are not surprising, since the industry had “grown up” without a degree requirement.
However, he added there are other competencies that existing advisers have which should be considered in framing the transitional arrangements.
“We’re not supportive of existing financial planners all having to go back and complete undergraduate degree requirements,” Mr Rantall said.
“As a guide, the advanced diploma of financial planning is certainly a minimum standard that should be adhered to. [In addition], pathways for a very experienced financial planner would be appropriate.
“The other thing to bear in mind is there is a one-off exam being proposed, so if you’ve got a level of experience and you complete the one-off exam then that should be adequate,” he said.
The exam was recommended by the Parliamentary Joint Committee on Corporations and Financial Services, which also suggested having existing advisers go through a ‘Recognised Prior Learning’ process that would consider the number of years an adviser has been practising.
That could mean many new entrants would have to return to college in order to meet the new minimum requirements.
Financial services training provider DeakinPrime said in a recent statement that the lack of clarity around transitional arrangements could be enough to drive many advisers out of the industry.
Mr Rantall, however, disagrees.
“This was talked about before, when the FOFA reforms were implemented that there would be a mass exodus and that hasn’t happened. In fact, the industry has grown,” he said.
“So there’s an increasing demand for advice, and the objective should not be to move advisers out of the industry. The objective is to make sure that advisers that are in the industry are adequately qualified to give the advice that’s in the best interest of clients.”
It is interesting that a lot of what I read is about ‘engaging next gen advisers’…
I am certainly on the younger end of the scale (although I’ve been in financial planning almost 10 years)and I have consistently found some of the worst advisers to be those that have been in the industry for 20-30 years stuck in their past ways of flogging product/churn.
Sounds like a shambles. The real question is what kind of education is required as opposed to how much? Degrees’ in isolation are unlikely to raise standards of advice, one might take the “better educated devil” position. Let’s open up a debate about the changing skill set advisers require, behavioral finance and applied psychology for example. Good intentions with not enough thought going into it as usual. I suspect there is not enough engagement with next gen advisers.
Steve, where in the article does the FPA try to “sell a course”. Mark Rantall clearly states the FPA position as not supporting experienced advisers having to “go back to school” and that “there are other competencies that existing advisers have which should be considered in framing the transitional arrangements”. Credit where credit is due, the FPA has in the main done a great job on behalf of advisers throughout the drawn out saga we all know as FOFA. Taking cheap shots at them through blogs like this does not achieve anything.
Ok I hear you & thanks, I will modify belief a bit ….John G
Knowledge gained from real Experience over many years is EVERYTHING. No amount of degrees or accreditation can substitute real experience and track records.
The fact the FPA is choosing to sell courses over experiences says volumes about this ridiculous compliance burdened industry and its greedy money grabbing bodies taking advantage of scaremongering.
That’s the truth, end of story.
Attaining some arbitrary level of competence will do little at a practical level, to stop clients being poorly advised by vertically integrated financial advisory businesses.
John G….
Some of the most damaging advice I have seen has been from Certified Accountants… Clients starting up a SMSF with < 50k to just sit in cash or recommending clients pump insane amounts of money into forestry plantations where the Account received a HUGE commission…
Obviously most are great and I work alongside some very capable CA’s and CPA’s but to say they are almost certainty trustworthy is rich.
I believe the greatest mistake you all made was to try to exclude the only group of ‘almost certainly trustworthy’ advisers ie Certified Accountants from your groups. If they were clearly IN & up near top of tree I think most shonk problems would quickly disappear.
I am not one but wil NEVER make a significant move without “running idea past”
What about educational requirements for Risk only advisers, we should not have to do Financial Planners Advanced diploma but Risk relevant educational requirements. Putting an investment plan together which is part of Advanced diploma should not be a Risk only adviser requirement to write risk.