‘Critical to the future of the profession’: Associations react to education reforms

On Monday, Financial Services Minister Stephen Jones announced that the government is set to reform the current education pathway for advisers, opening up the degree requirements to “a bachelor’s degree or higher in any discipline”.

This doesn’t mean it’s a free-for-all, with the minister adding prospective advisers will still need to meet minimum study requirements in relevant financial concepts “such as finance, economics or accounting”.

“They will also need to complete financial advice subjects covering ethics, legal and regulatory obligations, consumer behaviour and the financial advice process,” Jones said.

“This provides relevant core knowledge for an adviser, streamlines entry into the industry and retains the important role of tertiary education.”

Responding to the announcement, Financial Advice Association Australia (FAAA) chief executive Sarah Abood said the association welcomed the minister recognising that changes need to be made to the education standard.

“Along with our JAWG partners, the FAAA took a range of proposals to Treasury and the minister last year, and we are pleased that these have been heard,” Abood said.

“It is critical to the future of the profession that more people choose a career in financial advice and, as part of this, it needs to be easier for commerce, economics and finance students from all universities to become financial advisers.”

Last year, the Joint Associations Working Group (JAWG) put forward “core principles” to improve the pathways for new advisers to enter the profession.

Speaking about the proposal at the SIAA conference in May 2024, Abood explained that it is important that the “standard doesn’t fall”.

“Anything that we were doing to broaden the pool of candidates is not lowering the standard, it’s expanding it and making it more flexible,” she said at the time.

“It is really important to us that the qualification requirements remain at AQF7, it remains important to have a university degree and these proposals absolutely do support that.”

However, Abood cautioned that the government’s announcement appears to go “beyond the JAWG proposals”.

“We are concerned about changes that may adversely impact the existing universities offering financial advice education. It will be important to confirm that existing financial planning courses will remain approved in the new world and that these existing programs remain an important pathway for new entrants to join the profession,” she said.

“We note that important detail is yet to be communicated, including the timing, arrangements for current students, and any impact on those existing financial advisers who are striving to meet the education standard by the deadline of 1 January 2026.”

SMSF Association CEO Peter Burgess also noted that removing the limitations on degrees that can be undertaken was a positive step and would reduce unnecessary barriers.

“However, while flexibility is needed, care must be taken to mitigate the risk of variation in the quality of qualifications and licensee requirements,” Burgess said.

“It is essential advisers have the knowledge and skill they need to provide consumers with trusted quality financial planning advice.”

With this in mind, he said it is still “essential” that the current pathway is fixed to “attract future talent and like-minded professionals”.

“The lack of recognition for existing qualifications in the current pathway, forcing all new entrants to complete an ‘approved’ financial planning qualification, deters many prospective entrants, especially if they have a degree in a related discipline,” Burgess added.

The Financial Services Council (FSC) also backed the announcement, with CEO Blake Briggs arguing that the “unnecessarily restrictive” education requirements have contributed to the drop in new entrants from almost 5,000 in 2018 to just over 500 in 2024.

“The commitment by the government to reform financial advice education standards will streamline regulatory requirements on the advice profession and will ease the way for more people to become financial advisers,” Briggs said.

He added: “The FSC, in conjunction with the Joint Associations Working Group, has advocated for reform to the education standards. These issues have been further exacerbated by several universities withdrawing their financial planning courses and bridging units due to low demand.”

Meanwhile, Stockbrokers and Investment Advisers Association CEO Judith Fox said the current “failed approach” has locked out both new graduates and potential career changers with “excellent degrees suited to the adviser role who are currently considered unqualified”.

“Having highly suitable degrees in finance, commerce, business and economics from Australia’s top universities dismissed under the current framework has seen those wishing to work in investment advice turn away from their chosen profession,” Fox said.

Maintaining the other requirements to qualify as a financial adviser – the professional year, passing the exam, and completing continuing professional development – will ensure that the standard doesn’t drop, she added.

“Our sector will once again be able to attract the best and brightest from the top universities,” Fox said.

“The profession will be able to offer a high degree of quality in the advice role.

“In stockbroking and investment advice, new entrants straight from university will not face a client for some years, given they will rotate through roles in research, corporate advisory and back office, for example, before commencing the professional year, in order to gain a full understanding of capital markets and the investment landscape.”

The FAAA’s Abood added that with a federal election being held by May at the latest, making any legislation before then unlikely, it would “work with the government post-election to make sure that changes will support the growth of professional financial advice, for our members and consumers”.