The Government’s proposals to reset education standards for financial advisers have been welcomed by Stockbrokers and Financial Advisers Association (SAFAA) as restoring common sense to education standards to the benefit of Australians needing sound financial and investment advice by putting the profession back on a sustainable footing.
“The proposals resetting the education standards do not ‘roll back’ or ‘lower’ education standards,’’ said Judith Fox, SAFAA CEO. ‘’They restore Parliament’s intent, which clearly stated that a degree or degree equivalent was required and also deep experience and prior learning should be recognised,” she commented.
”It was FASEA — a bureaucracy that was averse to stakeholder engagement — that narrowed the scope of recognised qualifications. It deemed a range of advisers with degrees best suited to stockbroking and investment advice as unqualifed and failed to recognise skills, knowledge and experience.”
The impact of the existing education standards was not only resulting in an exodus of experience, but also driving up the cost of advice and discouraging graduates from entering the profession, as they found their degrees were not accepted.
‘’I wish to stress that SAFAA supports professional and educational qualifications, but we have long advocated that they should accommodate consumer preferences for specialist advice for different needs. This was not the FASEA approach, which was ‘one-size-fits-all,’ Ms Fox added.
In its submission lodged with the government today, SAFAA stated that the proposed qualification pathway brings the financial adviser educational requirements into line with the approach used by the Tax Practitioners Board and other professions. It allows advisers the flexibility of completing eight units out of a list of relevant fields in a single qualification or across multiple qualifications. SAFAA considers that the qualification pathways are flexible, transparent and easy to understand, unlike the previous standard that was made up of complex and lengthy lists of specific degrees that required advisers to complete subjects in financial planning, irrespective of whether they provided financial planning advice.
SAFAA notes that this approach discriminated against stockbrokers and investment advisers as degrees in economics, finance, commerce and business – qualifications which until now have been considered most suitable to a profession in investing – were not approved by FASEA.
‘’SAFAA member firms have found it challenging to source top graduates due to FASEA’s refusal to approve courses best suited to their business,’’ Ms Fox said. “Under the FASEA regime, a graduate from Sydney University with a bachelor of commerce, majoring in finance, would be considered unqualified and required to essentially ‘start from scratch’ and undertake an unrelated graduate diploma in financial planning before they can become a stockbroker or investment adviser.’’
SAFAA has also welcomed the experience pathway that recognises 10 or more years of full-time experience as a financial adviser and an unblemished record together with the completion of one tertiary unit in Ethics as a degree equivalent. Advisers have to also successfully complete the national exam.
‘’The experience pathway is good policy and common sense as it finally recognises the knowledge, experience and decades of professional development that advisers have built up over this time and will ensure we retain experienced stockbrokers, to the benefit of retail investors in Australia’’, Ms Fox said.
“Importantly, it ensures that clients are not left orphaned as experienced advisers exit the industry due to a lack of recognition of their decades of experience and CPD and clean records. Both the government and the opposition have recognised that that the current state of the financial advice industry is not sustainable. We are losing more advisers than gaining new entrants. Retaining our experienced advisers is key to fulfilling the desire of the financial advice industry to provide affordable and accessible advice to more Australians.”
“The experience pathway is only available for existing advisers, with ten years of experience and an unblemished record who have sat and passed a national exam. All new entrants to the industry must satisfy the qualifications pathway, which means all new entrants will be tertiary qualified.”
SAFAA has called on the government to implement the changes on an urgent basis. ‘’Advisers need certainty that these changes will be passed as they will have a significant impact on their careers, choices and mental health’’, said Ms Fox. ‘’Candidates also require certainty that they satisfy the qualification pathway so they can commence the Professional Year.’’
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