Last week the government issued a proposal paper recommending changes to the education standards set by FASEA. SAFAA has welcomed the proposals set out in the paper.
I wish to stress that we support 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’.
Educational standards are required that attract new talent to our profession, whereas the current framework is actively turning them away by insisting that graduates in commerce, finance, economics and business — the degrees most suitable to a career in stockbroking or investment advice — must complete an unrelated second degree or graduate diploma in financial planning. It is vital that we create a pathway into the industry for new investment advisers.
Many advisers have already undertaken the additional study required by FASEA and could well feel that the significant time and effort they have expended has been devalued. This is not the case. Education is always valuable and both the adviser and their clients are the beneficiaries. The challenge for the stockbroking and investment advice sector was two-fold. First, there were many existing advisers with degrees and qualifications that FASEA did not approve. Second, there are many cases of individuals with commerce, business, finance and economics degrees wanting to join the industry, but who have decided not to proceed due to the requirement to take on additional, unrelated study.
What is important to recognise is that the government’s proposals restore Parliament’s intent, which clearly stated that a degree or degree equivalent was required. 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 unqualified. Working in markets is different from being a financial planner, which means FASEA’s educational focus on financial planning degrees excludes much-needed expertise. The proposed changes to the qualification pathway are sensible and will enable many more advisers to have their existing degrees and qualifications recognised as a primary qualification and opens the pathway for new entrants to the profession.
The proposal paper also acknowledges that a degree should have standing, irrespective of when it was acquired. It would be inconceivable to propose that High Court judges were unqualified because their degrees date from the 1980s, yet FASEA made such a determination in relation to degrees relevant to the investment profession.
The paper also proposes recognition of experience and prior learning as the equivalent of a degree for existing advisers. Again, it was FASEA that deemed skills, knowledge and experience unsuitable for recognition and would not recognise years of CPD as prior learning. Both the Government and Opposition are agreed that experience coupled with an unblemished record should be the equivalent of a degree.
For example, if we consider the introduction of degrees for nurses, no one proposed that experienced nurses should have to leave the profession because they did not have a degree. Rather, their experience and prior learning was recognised as equating to a qualification and their knowledge and skill continued to be utilised, including in mentoring the next generation. This is what is being proposed for stockbrokers and investment advisers with no complaints who have longstanding relationships with clients over decades, but who might not have a degree. The exodus of experience we have witnessed as a result of the FASEA regime does not benefit clients and lessens the capacity of the industry to provide mentors for the advisers of tomorrow.
Stockbroking has been in existence since the coffee houses of London and Amsterdam. Those providing investment advice are not ‘salespeople’, but professionals with a history that goes back centuries. The profession has made an incredible contribution to Australia’s economic strength, not only in terms of personal wealth creation, but also in all-important equity formation for Australian companies, ranging from CSL, BHP and CBA down to the smallest and smartest technology and science successes.
Recognition of their experience when coupled with a clean record and the appropriate degrees for a profession in investment advice means that their expertise can continue to be utilised in raising capital for Australian businesses and assisting investors to take up investment opportunities.
The proposals do not ‘roll back’ or ‘lower’ education standards. They reset them to align with Parliament’s intent to ensure that appropriate degrees are recognised for the financial advice service being delivered, which is to the benefit of clients who seek specialist advice according to need. And the proposals recognise that retaining experience that comes with an unblemished record is vital to ensuring Australians can access the advice they need, reversing the FASEA trajectory of constrained and more expensive access.
