The experience pathway is drawing former advisers back into the profession, according to a compliance expert.
When the experience pathway legislation was passed in September 2023, it was met with split reactions from the financial advice community.
For some, it represented a common-sense decision that allowed good, experienced advisers to remain in the profession despite not meeting the new education requirements. To others, it wound back measures to create a unified level of qualification across all practitioners, while some were outraged that they had completed costly and now-unnecessary education.
Under the legislation, an adviser is deemed to have met the education requirements if they have 10 years’ (cumulative) experience providing advice between 1 January 2007 and 31 December 2021 and have not recorded any disciplinary action on the Financial Advisers Register (FAR) before 31 December 2021. Importantly, advisers still need to pass the exam.
Speaking with ifa, the chief executive of Fourth Line, Joel Ronchi, said the experience pathway being introduced is driving former financial advisers who meet the criteria but had stopped practicing to reach out about sitting the exam.
“The primary driver, from my experience, for ex-advisers reaching out about rejoining the profession is the 10-year professional experience rule and the exemption it provides for the higher education requirement of the professional standards, coupled with the removal of short answer questions in the financial adviser exam,” Ronchi said.
“Advisers who deliberately and voluntarily withdrew from the industry before the exam threshold expired, or who simply didn’t come back into advice because of the exam and higher education combination (but meet the existing adviser definition), are now considering having a crack at the exam.”
According to the experience pathway bill’s explanatory memorandum when it was introduced, there were 10,030 practising advisers that were first authorised in 2011 or earlier, which is the cut-off date for eligibility of the pathway.
Citing data from the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) prior to their merger, the government estimated about 6,520 advisers with 10 years of experience would benefit from the experience pathway as they have not yet met the education requirements to remain an adviser.
It also estimated that 2,086 advisers were not intending to remain in the industry after 1 January 2026, which is the deadline for existing financial advisers with no degree to attain an approved qualification.
Ronchi said that for many, they may not necessarily be keen to rejoin straight away, it’s more to do with “keeping their options open”.
“It’s attractive because of the shortage of advisers in the market,” he said.
“You weigh it all up and they’re thinking to themselves, ‘Well, why would not? Why wouldn’t I keep my options open?’”
There are others, Ronchi added, that are looking at it as an opportunity to get back into the profession they love.
“Some thought they wouldn’t be able to do it because they were never going to do higher education and the exam was challenging because of the ambiguous short answer questions, but now those two hurdles are gone,” he said.
“It’s quite enticing for many, especially as the remuneration for an experienced adviser is quite good.”
While Ronchi said that he can understand the perspective of advisers that are against the experience pathway and put value on the education standards being equal across the board, education alone does not improve the provision of advice.
“I can tell you right now that the quality of the advice across the industry is really improved, I can see that from what we do at Fourth Line,” he said.
“It’s not the level of education per se that makes a good adviser or good advice or anything like that. It’s their professionalism, the level of care they put into it, their relationship with their clients, and so forth.
“And maybe you do get some of that from higher education. And maybe it’s just built into the individual person as well.”
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