'Large number of advisers who are very anxious': Industry reacts to Jones' education and exam announcement

A number of industry groups have reacted to financial services minister Stephen Jones' announcement this week that a consultation paper will be developed on education standards and the adviser exam.

On Wednesday (10 August), Mr Jones said the government would look at options to "streamline the education requirements for financial advisers" and addressed the 30 September deadline for existing advisers to pass the exam and continue to provide financial advice, saying that following the deadline, he will ask Treasury to explore how the exam can be improved, such as reducing the number of questions.

Speaking to ifa after the announcement, the Association of Financial Advisers (AFA) CEO Phil Anderson welcomed the news saying he is pleased that the government is looking at how to better recognise prior learning and experience and how additional pathways can be made available for new industry entrants.

"We welcome the government’s recognition of the important fact that the industry believes that the Code of Ethics can be sensibly modified to remove obstacles to the provision of financial advice. We anticipate that this exercise will be informed by the Quality of Advice Review and we welcome the consultation that will take place next year," Mr Anderson said.

"There are a large number of advisers who are very anxious, having sat the financial adviser exam in recent weeks and awaiting their results. The minister has been clear in his media release that the deadline for passing the exam remains 30 September 2022, and impacted advisers will need to plan on this basis."

Meanwhile, the Association of Independently Owned Financial Professionals’ (AIOFP) executive director Peter Johnston also welcomed the news, however added that the industry group is "naturally disappointed" that Mr Jones did not defer the exam until after the 1 October "cliff" date to restructure it.

"We were hoping for a 12-month deferral of the exam, a removal of the ambiguous ethics content and inclusion of questions around competency of their advice specialty," Mr Johnston told ifa.

"To be fair, the minister did not specifically promise any exam changes, but we will however continue with our lobbying activities until October 1st in hope of a change of mind."

It comes after ASIC confirmed that the results of the latest exam sittings will be made available in the first week of September, which will give advisers who failed the exam less than four weeks to decide on their next course of action.

Mr Johnston said that the AIOFP is urging those waiting to "commence these preparations".

"We are requesting that anyone buying practices over the next six weeks to be compassionate and fair with the terms and conditions, in many cases this will be a person’s lifetime work and needs to be treated with respect," he said.

"We have already had enough mental health problems, stress and suicides over recent years and want no more. It will be a good time to check on those who fail the exam to see how they are coping once the results are out."

The Financial Planning Association of Australia (FPA) CEO Sarah Abood — who previously stated that addressing the education standards should be the “first order of business” for Mr Jones — said the association is looking forward to participating in the consultation "to ensure the continuing professionalisation of financial advice".

"Financial planners currently face considerable uncertainty regarding future professional standards, and many have paused or postponed studies until the outcome is known. Hence we believe the resolution of this matter is of the highest priority," Ms Abood said following Mr Jones' announcement.

"We encourage the government to ensure the consultation process is targeted and efficient, and we are keen to see swift and decisive action by the Minister giving the profession certainty on these standards."

In the lead up to May's federal election, Mr Jones said Labor would not require advisers with 10 years of experience and an “unblemished record” to complete a university degree to practice.

Currently, existing advisers with no degree must have an approved qualification by 1 January 2026.

On a special Momentum Media podcast recorded prior to the federal election, Mr Jones outlined his plans to address the education standards.

"... there'll be a bunch of people who've been providing excellent advice for decades that we don't want to tip them out of the industry at exactly the time when we need them," he said.

“We need them as mentors, we need them as service providers, we need them as trainers, we need them in the industry."

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.