‘The best news’: Will advice education reforms save a drowning profession?

In a statement last week, Financial Services Minister Stephen Jones announced that the government will introduce measures to reform financial adviser education requirements, widening the gate for potential entrants as the profession struggles to keep its numbers above 15,500.

“Under the government’s changes, the proposed education standard will centre around a new requirement to hold a bachelor’s degree or higher in any discipline,” the minister said.

While the degree requirements will be opened up, the minister noted that prospective advisers will still need to meet minimum study requirements in relevant financial concepts “such as finance, economics or accounting”.

Appearing on The ifa Show following the announcement, WT Financial Group chief executive Keith Cullen said this was an important step for a profession that was left “barely treading water” with the sheer lack of incoming talent.

“It is just such a big win for the profession,” Cullen said.

“There's no path to organic growth in this profession if you can't actively recruit people, and you can't actively recruit new people into the profession when you've got less than 500 becoming available every year. I mean, that was just insanity.”

However, the announcement has since been met with varying degrees of outrage from the advice profession, voicing concerns about lowering the education standard after years of work to shift public perception of financial advisers following the royal commission.

Even so, Cullen explained that despite the government widening the gate for any degree, the remaining requirements in place will ensure that only those with the necessary knowledge will be able to enter the profession.

“Look, most degrees will have at least one or two of them, but it will be four base units of competency and nearly every economics, nearly every business degree will cover at least three, if not all four of those,” he said.

Having expressed his contempt for the Financial Adviser Standards and Ethics Authority (FASEA) imposed ‘relevant degree’ in the past, Cullen said the announcement was the “most exciting news” he’d heard for a while.

“The best part about the minister's announcement, obviously, is finally people have woken up and there's commitment to reform this whole notion of what constitutes a ‘relevant degree’.”

Further to this point, Cullen explained that the government’s latest announcement would finally deliver on what was meant to occur before the establishment of FASEA in 2017.

“This is what it was supposed to be before FASEA became this rogue body that the government lost control of and it ended up creating an esoteric degree and calling that a relevant degree,” he said.

“Where do you think the term relevant came from in the first place? It was supposed to be a degree relevant to financial advising - i.e. finance, economics, accounting, commerce, etc - topped up with some vocational training.

“This is exactly what FASEA was supposed to deliver. Unfortunately, they didn't. The previous government recognised that. They disbanded the body, but the legacy remained.”

While there have been well-founded concerns about the upcoming election and what it might mean for promised reforms to the advice industry, Cullen said advisers could rest assured knowing that the education reforms were supported by both major parties.

“What the government has announced, what Stephen Jones announced yesterday, is the best news … And the best part about it is that, I was at a dinner that Luke Howarth spoke at last night, this is supported by both sides,” he said.

“So, regardless of who our next minister is, who forms government after the next election, we will hold the blowtorch to them and make them deliver on this.”

In comments to ifa last week, shadow financial services minister Luke Howarth confirmed his support for the reforms, though he also noted his disappointment that it was “another announcement on the eve of an election, with no hope of it being legislated”.

“While I would have to see the detail, I am supportive of making the degree requirements more flexible and getting more advisers into the market,” the shadow minister said at the time.

“Taking this work forward would also be a priority for me as minister.”

To hear more from Keith Cullen, tune in here.