The Advisers Association (TAA) says there are two problems currently facing the financial advice industry – the short-term exodus of advisers and recognising advice as a profession.
TAA CEO, Neil Macdonald said, “The question we are asking is which of these two problems is Treasury attempting to resolve with its recent consultation paper on financial adviser education standards? If it is both, what trade-offs are acceptable?”
Treasury released its Financial Adviser Education Standards Consultation Paper (the Consultation Paper) on 23 August 2022.
Mr Macdonald said for financial advising to be recognised as a profession, advisers must have ‘relevant’ tertiary level qualifications. “The industry therefore needs to decide what qualifications are relevant, by when and for whom, as not one size fits all.”
In order to address the more pressing problem and stem the current outflow of advisers from the industry, competent advisers with many years’ experience must be allowed to stay in the industry for an extended period of time without being compelled to earn a degree. However, this will likely impede the recognition of financial planning as a profession.
“Consumers face a massive advice gap,” Mr Macdonald said. “We are losing hundreds and hundreds of advisers at the same time as demand for their services is increasing. Therefore, it’s reasonable, and even necessary, to allow highly ‘experienced advisers with decades of experience’ to remain in the industry for an extended period of time, and Treasury’s recent consultation paper recognises that.”
However, TAA thinks this should be redefined as highly ‘competent’ advisers with decades of experience.
“We also think there should be other caveats, as outlined in our submission to Treasury’s Quality of Advice Review in January this year.”
In its submission, TAA said the extension should only apply to highly competent advisers with:
- 15 years’ experience as of 31 December 2021
- The consultation paper suggests advisers have 10 years of full-time equivalent experience in the 15 years between 1 January 2004 and 1 January 2019 in Australia, which may or may not be consecutive
- Require a competency assessment of those advisers at AQF7 level, or above, and
- Have a sunset clause for those advisers to either have the relevant qualifications by 30 June 2030 or 2035, or exit the profession
“What we need to recognise is that a lot of advisers just got on with it,” Mr Macdonald said. “They undertook the study required, often at great personal and professional expense. To have an open-ended extension for those who did not go the hard yards is not fair on those who did.”
The Advisers Association will be making a submission in response to the Consultation Paper. Submissions close on 16 September 2022.