Experience pathway — good or bad for the industry?

Last month, Financial Services Minister Stephen Jones confirmed that the provisions for the implementation of the experience pathway would be ready for legislation by mid-2023.

“I can advise you today that I am confident that we will have provisions ready for legislation in the first half of next year,” Mr Jones said.

But not everyone views the experience pathway as a good move. Namely, the proposal which would equate the worth of a degree with 10-plus years of experience in the industry is by some considered a carve-out of the education requirements.

Namely, in its submission to the government lodged in September, the Financial Planning Association (FPA) argued against the pathway. The group said that while it considered experience as an important factor in competence, “we believe unassessed experience alone is an insufficient foundation to meet the objectives of raising the minimum education requirements for professional financial advice providers”.

“Financial planners want to be recognised for the competence, education and experience they already possess as professionals, not work in a profession where some practitioners are given a free pathway indefinitely,” the FPA continued.

Since Mr Jones’ latest announcement, the group has toned down its disapproval and is now seeking certain limits.

The group’s likely merger partner, the Association of Financial Advisers (AFA), has also conditioned its blessing on the introduction of a 10-year sunset period.

According to AFA, the experienced adviser pathway should apply to advisers with 10 years’ experience (across the last 15 years) as at 1 January 2022, who had a clean record, but it should be subject to a 10-year sunset clause.

Speaking to ifa, AFA CEO Phil Anderson said: “We continue to support this position, which we believe provides a good balance between the professional objectives of the advice profession and the need to retain experienced quality advisers”.

However, speaking on a recent ifa podcast, Eugene Ardino, CEO of Lifespan Financial Planning, offered another perspective.

Stressing that he does not agree that the proposed pathway could be a blemish on the industry, Mr Ardino said, “there are many things that make a professional”.

Conceding that “you’ll potentially have advisers that don’t have a degree”, Mr Ardino said: “You’ll have a lot of advisers that have degrees, just not financial planning degrees, so they tick a degree box.”

“I think there are many things that make a profession. There are many things that make a person or a practitioner a professional. If a client wants an adviser with a financial planning degree, well, there’ll be plenty of them out there. So horses for courses,” he said.

“I don’t see that as a big deal, and I don’t see why we have to replicate all the other professions”.

Stressing that “we can build our own profession”, Mr Ardino highlighted the positive features of the experience pathway in the context of the great adviser exodus.

“Our profession is very different from others in many ways. We deal in opinions more than facts, I think, not just interpreting laws and often those opinions can be back-tested to see how good or how bad they work, which again, is not as common in other professions. It is really different, and it probably needs to cater to more types of advisers,” he opined.

“So no, I don’t think that’s a big deal and I think if it also means that we keep more advisers, we’re not going to have enough advisers to meet advice demands as it is even if no other adviser leaves, and we get 10 times the number of new advisers coming in.”

Ultimately, Mr Ardino said, a balance needs to be struck between ticking boxes and ensuring more Australians have access to advice.