By Judith Fox, CEO, Stockbrokers and Investment Advisers Association
The consultation by the government on changes to the education standards for advisers providing personal advice to retail clients has concluded. This consultation honoured the Minister’s commitment to treat ten years’ experience as a financial adviser and a clean record as the equivalent of a degree. This ensures that much-needed experience is retained, more retail clients do not become orphaned and there are mentors for the next generation of advisers.
Regrettably, a number of advice associations called for a sunset clause of 2032 to be introduced, after which time advisers would be unable to advise retail clients if they have not completed mandated additional tertiary education.
Currently, advisers are required to satisfy the FASEA-imposed education requirements or cease providing advice to retail clients by 1 January 2026. Imposing a sunset clause on the experienced pathway to 1 January 2032 would move the drop-dead date by six years for experienced advisers. It essentially represents a replication of the current FASEA regime but with a later expiration date – it is ‘kicking the FASEA can down the road’.
This is not the basis of the experienced pathway that the Minister proposed. An experienced pathway is meant to acknowledge the experience, qualifications and knowledge of existing advisers – not string them along for another period of time and impose mandated tertiary education requirements upon them in a different guise.
The Minister could not have been clearer about what he was committing to, with public statements such as the following confirming the government’s intent.
- ‘We’re going to assume that that ten years plus experience is worth at least a degree. We’re going to treat you like professionals.’ (AFR, 9 December 2021)
- ‘The Labor government will not ask you to take a bachelor’s degree to keep your qualifications. We’re going to assume that 10 years of experience is worth at least a degree.’ (ifa, 9 December 2021)
- ‘…it’s [FASEA] treating mid-career professionals like undergraduates. We need a system that recognises the wealth of knowledge held by experienced advisers.’ (Money Management, 9 December 2021)
It would be inconceivable that advisers who have qualified via the experienced pathway would be required to undertake further tertiary education in order to remain in the profession after a period of time – this would be totally inconsistent with and undermine the Minister’s election commitment. It would also defeat the purpose of introducing an experienced pathway in the first place.
A sunsetting clause also ignores the obvious fact that in 10 years’ time an adviser will have 10 years’ more experience, training and CPD and will be an even more valuable member of the stockbroking and investment advice profession than they are now.
It would also be inconsistent with the treatment of experienced professionals in fields such as nursing and law. In those two professions tertiary qualifications were introduced as a mandatory requirement, but existing nurses and those lawyers who had joined the legal profession via the articled clerk pathway were not required to ‘go back to school’ to continue working. It was considered highly desirable to retain these experienced nurses and lawyers, while requiring all new entrants to be degree qualified.
It was a relief to see the Minister withstand the push to reinstate the FASEA model. Just last week, at an adviser conference he stated: ‘I think we’ve got the right balance; we haven’t set the bar too low or too high. I think after 10 years in the industry you should apply the sort of knowledge and experience necessary to provide advice as required. We are going to stick to what we promised before the election.’ (Financial Standard, 21 September 2022).
This article is for information only.