Minister sends message to advisers opposed to experience pathway

In early September, Parliament enacted the experience pathway legislation, which qualifies an adviser as having satisfied the educational prerequisites if they have 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021, along with an unblemished record.

The announcement of the pathway’s approval elicited a mixed response within the industry, with both joy and dismay creating a relatively even divide.

Speaking to ifa on Friday on the sidelines of a breakfast event organised in Wollongong by the Financial Advice Association Australia and the Financial Services Council, Mr Jones underscored the significance of the pathway as an integral component in the professionalisation of the industry.

“We’re on a pathway towards professionalising the industry. This is a very pragmatic, once only, through the gate, then the gate is closed, mechanism to ensure that we don’t throw the baby out with the bathwater,” Mr Jones said.

“There are financial advisers who’ve got an accountancy degree, who are tax practitioners, who might have a master’s degree in a relevant field, but they haven’t got all of the qualifications in the existing pathway, who are serving their clients and their staff well, and mentoring new advisers. It would be a bit nuts to say to those people, ‘You’ve got to leave the industry’, when we’ve got a critical shortage of advisers.”

The minister added that the experience pathway is “a very pragmatic solution” and stressed that it doesn’t diminish the fact that the industry is progressing towards professionalisation.

Earlier in the day, speaking to a room full of advisers, Mr Jones addressed the significant exodus of advisers over the past few years.

“Frankly, not everyone that has left the industry is a national treasure,” the minister said.

However, he added that a review of the qualifications framework needs to be conducted if the objective is to expand the industry, which currently consists of under 16,000 advisers.

“I am here for a professional industry,” he said.

“So, whatever we’re doing in that area will be about ensuring we maintain an appropriate model for professionalisation. But we’ve got to find more ways for people to be able to enter the industry, more ways for people to get the appropriate qualifications to practice in the industry than we have at the moment.”

The minister added that unfortunately, most Australians, especially young adults at 18, don’t typically aspire to become financial advisers.

“No offence should be taken at this, but kids at the age of 18 aren’t waking up, unless they’re related to you, and saying ‘I want to be a financial adviser’,” he said.

“They might be saying, ‘I want to be an accountant’ or ‘I want to do a commerce degree’, or they might be saying, ‘I like law’, or they might be saying, ‘I want to study economics’, we’ve got to look at a way that we can marry up the core knowledge, skills, and experience that we expect in any profession with the way that people are actually entering and making their way through university.”

Mr Jones had earlier announced that he would turn his attention to a new entrant pathway in the back half of 2023 – a pathway that has been in discussion since 2021.

Namely, the new adviser pathway and the experienced adviser pathway have been closely linked since the previous Liberal federal government issued a consultation in December 2021.

But while both the previous government and the current Labor government have consulted on the pathway, there’s been no meaningful movement on the new entrant front.

The most recent consultation gave three proposals for new entrants:

• Streamline core knowledge areas from the current 11 to a proposed five.
• Allow education providers to self-declare that the degree they are offering teaches the core knowledge areas.
• Streamline the professional year by introducing more flexibility in how candidates are able to complete it, including the point at which they have to pass the exam.

A third consultation is now said to be in the works. But it is unclear how similar the upcoming consultation’s recommendations will be to those in the August paper.

According to Wealth Data, as at 28 September, there are 15,710 advisers in the industry.