The government is considering giving more weight to years on-the-job in adviser standards. That might not be popular with those who have adjusted to the current rules – or potential clients.
Critics of the advice industry’s professional standards have long argued there’s little recognition of experience. The topic comes up perennially from associations, politicians and some advisers themselves.
Now, as the baton passes from the Financial Adviser Standards and Ethics Authority to the Minister for Financial Services, the debate about whether experience should be acknowledged in the standards is under way again.
In the final weeks of last year, Treasury released a policy paper asking whether the standards adequately account for on-the-job experience. It has now put forward an alternative standard to capture advisers who haven’t or won’t meet the current requirements.
Under the proposal, an adviser with 10 or more years’ full-time experience in the past 12 years would need to complete only a tertiary-level unit on the Code of Ethics by January 2026 to continue advising. In other words, an approved bachelor’s degree or graduate diploma would not be required for advisers who meet the other requirements.
What advisers think
In light of this, we asked our readers, “Should on-the-job training (or years of experience) be recognised for adviser education standards?”
Among more than 550 responses, a slight majority (56.4 per cent) were in favour of on-the-job training or experience being recognised, while the remainder (43.6 per cent) were not in favour.
Despite this support for a mechanism that recognises on-the-job skills, changes to the existing standards won’t be an easy sell, for a number of reasons.
First, we’ve seen tens of thousands of advisers either exit the market completely or invest in years of education to meet the new benchmark. Resuming practice in an industry after you’ve left and offloaded clients isn’t easy. Accommodations for on-the-job experience are likely to aggrieve these ex-advisers, as well as active advisers who have adapted to the current standards.
Second, despite the rapid decline in the adviser workforce, our data shows that today’s remaining advisers have higher quality scores than those who have departed – which has implications for the end client. Three-quarters of current advisers have at least an approved bachelor’s degree, which is unsurprising given the education standards deadlines. Meanwhile, more than a quarter have been in the industry for more than two decades.
The government proposal recognises that the advice workforce is declining rapidly and some former advisers may be lured back if the education requirement is reduced. However, the change may not win a lot of fans among those who have already completed the requirements or made the costly move out of advice in the past five years.
Article by:
Comments10
"The true spirit and desire of a real professional is to continually upgrade their own knowledge...so those adviser that are griping about having to do the degree unecessarily are not acting like a true professional...they have to love their upgraded knowledge..stop winging you are not promoting the front of a true professional...clients that love and value their adviser do not care whether they have a degree or not.. The people wingeing are most likely the dubeous doubters who wont ever seek advice anyway...everyone else supports it...so...media why the negative outpooring..you dont have any real.worthwhile supporters..or known worth mentioning...so lets get on with it and rebuild our PROFESSION!"
Phil 21:11 on 09 Feb 22
"In 20 years of providing advice I have never been asked by prospects, clients or even professional referrers, whether I have a degree. In fact, I haven't even been asked whether I am licensed to provide advice. I don't have a degree, and my clients and referrers do not care. They care whether I can do the job."
David Smith 14:08 on 04 Feb 22
"Having had retirement thrust upon me on 1/1/22, solely due to not wanting to give legitimacy to Fasea's exam process, this new proposal is staggeringly bad for all those who have now sold their practices. Over 40 years & no complaints and many clients with me for that entire period speaks adequate volumes about one's ethics, but no-one in power cared. Fasea was full of people with agendas in stark contrast to the White Paper that formed them and then the government didn't have the guts to correct them. A couple of industry diplomas, 5 or 6 pertinent grad certificates and countless specific subject courses were totally disregarded. It became clear that FASEA truly meant: Fools Aggressively Screwing Educated Advisers. "
Batman's mate 08:44 on 03 Feb 22
"Shifting goalposts - we were all told extra education is required, FASEA decided the CFP was basically worthless and so many have gone back to do extra study. It would seem the penny has finally dropped and the powers that be are now understanding that the pendulum has swung too far, and consumers are being adversely impacted by reducing adviser numbers and a higher cost to access advice. Economics 101 – you reduce the supply of workers in an industry and add extra layers of complexity and costs for those remaining in the industry, then of course the cost of financial advice to consumers will go up. This is a total slap in the face for those that got started on updating their education requirements and have done so during what has been an incredibly difficult period for the industry (due to both the regulatory changes / pandemic / volatile markets etc). I have an Advanced Diploma, plus did my 5 unit CFP course (which I recall being a very tough course) and have been advising since 1999 and am a responsible manager for an AFSL…but was still forced to go out and sign up to a Grad Dip – which is basically covering topics I have previously studied. I have juggled this extra study around family time and running my business….I am close to done and am now being told maybe you didn’t need to do all that after all. If, like me, you are feeling a bit jaded by all this, it is probably worthwhile to consider a recent comment the minister for financial services made on this exact topic – which I am sure will put you mind at ease...I quote, ”I don’t think you should ever really feel sore about educating yourself and keeping up to date and becoming more professional, so I would hope no one would see that as a wasted opportunity,” "
Ben Maw 04:09 on 03 Feb 22
"I am so gratified to see such informed and intelligent comments here. I concur absolutely with Tabitha, Roland, Jeremy and Bill. There is a clear absence of those smug individuals with the bullshit FASEA qualifications saying how us uneducated journeymen and women should leave the industry because we can't or don't want to pass an exam that proves absolutely nothing. Recognising experience now is a joke - too little too late."
Deputy 22:05 on 02 Feb 22
"As a female adviser whom took some time to have a family and the cost of maintaining licensing during that time didn’t make sense. I went to work for a licensee for a period of time, before returning to practice management and then returning to face to face advice. My 8 years face to face planning, 3 years with licensee services and then 4 years practice management and diploma and advanced diploma are all irrelevant. So under the FASEA lens I began study nearly 4 years ago. Approx $36,000-$40,000 of study and about 1000 hours so far and I have 1 subject to go. This changed view is much more practical especially when industry and previous financial planning businesses were so hesitant to commit to education standards and investing in people.I have one subject to go. I’ve paid for the whole damn thing, through the cost and the investment in my time and what that has taken from my family and life especially during very trying COVID years. Am I any more ethical? No, because I don’t believe that ethics are learned: they are values that are inherent to us, doing the right thing when no body is looking. Do I remain committed to the professionalism of the industry? YES! But I’m committed to it to better the lives of clients, and grow new advisers in my business and the industry to grow and do better. This seems like it continues to ignore the practical issues facing our professionals whom have experience , especially women where 6 out of the last 8 years or 10 years full time planning may be a pipe dream if you took a pause to have kids. "
Tabitha Tworek 18:01 on 02 Feb 22
"Yes I totally agree also, and 100% of my clients also agree. I've had this education discussion with all my existing clients and all have said well we came to you because of your experience. I have had 2 prospects (yes ONLY 2) say to me in the past 15 years we will not deal with you because you don't have a degree. People deal with the individual and the understanding we bring to them, no certificate on the wall will ever educate us on empathy. Finally the government are listening. I've been giving face-to-face advice to everyday clients for 41 years and still got a few years to go before age pension age. So I will very much appreciate giving me the experience exemption."
Roland K 17:53 on 02 Feb 22
"Bill and Les make total sense. The debate about required tertiary, theory based learning being superior and that experience should be discounted towards irrelevance, has already had it's day and look what happened. Ten thousand Advisers exiting the Industry, the cost of Advice increasing to levels that most Australians are uncomfortable with, the Retail advised Life Insurance Industry in turmoil, premiums rising up to 100% for disability policies and many Advisers having to scope out Insurance advice, as it has become too expensive and complex to provide, which has affected all Australians negatively. This utopian view of theoretical learning and the race to see how many degrees and certificates you can hang from the wall as a sign of a true professional, has not helped the millions of Australians who now are so much worse off. Everything in life must be balanced. Higher education is a noble and justified objective. Where it all fell down was when vested interest groups started lobbying and pushing their own agendas to the detriment of the majority of Australians by dividing and conquering, using age old tactics of misinformation and in many cases, downright lies. Those people who discount experience, are showing that they have not been around long enough to know any better."
Jeremy Wright 16:20 on 02 Feb 22
"I understand why those advisers who have already become FASEA compliant, in terms of educational requirements, feel a little put out that a 10 year advising experience may now exempt some advisers from some or all of the educational requirements due by 2026. Those of us who are licensed to drive a motor car or ride a motorcycle would be pissed off if suddenly a state government decided to hand out driving licenses without any tests, purely because their licensing bureaucracy could no longer handle the volume of testing, because of the impact of COVID on staffing levels. The argument from the younger advisers (I sense that is the source of most of the angst) seems to be that experience has no value whatsoever: they seem to think that a piece of paper, certifying you've completed an academic course, is all that is needed to hang up a shingle. Even FASEA don't believe that ! The reality is that any 25-year-old, diploma in hand but lacking life experience, that thinks they can sit in front of a 50 year old couple and discuss the vexed question of retirement funding versus overseas trips, is kidding themselves. Then there's the vexed question of risk specialists and stockbrokers. And no, neither class of adviser has gone away, although some of us have struggled to learn how to pass the FASEA exam. I have analyzed FASEA's requirements for 2026 and there is not a mention of life risk or insurance: I suspect it's like lawyers graduating with the public expecting them to know all about estate planning. Writing life risk properly and strategically is a specialized skill, and in reality the knowledge needed to ensure that clients are not hurt by poor risk advice can only be obtained with experience. There are just no degrees, diplomas or university courses available to develop the skills needed to advise on life risk. So meeting FASEA's requirements by 1 January 2026 cannot and will not be of any value to risk advisers, who do not engage in investment advice of any sort, by choice. If I may be allowed to cite my own circumstances as an illustration. I joined this industry as a 40-year-old after a 21 year career as a Commonwealth public servant. I threw myself into learning as much as possible about life risk, undertaking every possible course that was then available, such as the courses then available from the LUA( now AFA). As a mature person I quickly formed the view that until I had five years of experience talking to clients every day about their risk programs, I considered myself "armed and dangerous". Learning to be a confident list risk advisor is about experience "face-to-face" with clients, while endeavoring to engage with experienced advisers to learn the "ins and outs" of the life risk industry. I expect this opinion will attract the trolls that seem to inhabit our industry these days, fearlessly thumping keyboards without fear of ever having to meet face-to-face with their targets, and be called upon to personally justify their arguments. C'est la vie. "
Bill Brown 15:12 on 02 Feb 22
"The responses your survey got would directly correlate with the age groups surveyed. I wonder how many new entrants or advisers with a few years experience will have dealt with their clients going into aged care, the death of clients or their family members, divorce or separation? Why would anyone assume an adviser with a masters would act any more ethically than someone who has been in the industry for 15 years? I'm an older adviser with more than 20 years experience. I will not be undertaking a degree between now and retirement. Personally I have been at the forefront of the push for fee for service, we were doing this years before commissions were banned. The ethical standards that are now in writing are benchmarks set by advisers that have been in business for a very long time. It is ridiculous to say that a change to recognise years of service will not make advisers who have made the change happy, and clients have always had the benefit of choosing the adviser that the feel most comfortable with. Most advisers with many years experience will have established client bases and they will pick which clients they want, not vice versa. Seems to me that this debate is simply the next moist interesting thing to debate, rather than being of any benefit to the industry. All responses should quote years in the industry to add perspective."
Les 14:23 on 02 Feb 22