The Association of Financial Advisers has declared its support for mandatory degrees for new entrants into the profession and a standardised, registration exam for all financial advisers.
Releasing its response to the Parliamentary Joint Committee on Corporations and Financial Services (PJC) inquiry into lifting the professional, ethical and education standards in the financial services industry, the AFA has given its approval to a number of the proposals.
In particular, the Association said it agreed with the recommendation that all new advisers should have a relevant degree, with the added recommendation that graduates of other degrees be allowed to transition to a financial advice career through the completion of an appropriate bridging course.
The AFA also agrees that all advisers should be required to complete a once-off, standardised registration exam before being able to use the term ‘financial adviser’. The proposal to introduce mandatory association membership was similarly met with AFA support.
However, the Association has cautioned that while it’s important to increase standards for existing advisers, this needs to be done over a realistic timeframe, so as to avoid excessive interruption to the market place and reduced consumer access to advice. In its submission, the AFA recommended, as a first step, that the current education standard for existing advisers be raised to the advanced diploma level (AQF6). ‘We do not believe that it is appropriate to require existing advisers to go back to full time study to complete a degree,’ the AFA said.
AFA President, Deborah Kent, added: “Whilst we support an increase in the education standard for existing advisers we also believe that this needs to be pragmatic and that the transition timeframe needs to enable advisers to prepare for further study and to complete this over a realistic timeframe so as not to create an undue distraction to their core role to support and service their clients.
“We are also calling for clarity on this as a matter of priority to ensure that advisers have as much time as possible to address this.”
Education and professional standards are one step in a long term process to bring universal respect and recognition to financial advisers
The AFA’s submission similarly noted the need to allow advisers to seek provisional registration, early in their professional year, to avoid potential negative economic consequences.
‘Currently more than half of the financial advice community work within small self-employed businesses. Adding additional non-income producing staff involves significant cost, particularly when there will be limits on the activities that they can undertake,’ the Association stated in its submission.
As an alternative to the model proposed, the AFA suggested that trainee advisers could complete their registration exam in the first three months of their professional year, utilising a provisional registration until the completion of the full year.
“Education and professional standards are one step in a long term process to bring universal respect and recognition to financial advisers as belonging to a trusted profession. We acknowledge that ultimately it is behaviours and conduct that determine an advisers professionalism, but equally we recognize that the public are looking for clear signposts that standards across the board in financial advice have risen. Taking a strong position on education and professional standards will go a long way to addressing this issue,” Ms Kent added.
To view the full response from the AFA, click here.
The AFA has also released its response to the Financial System Inquiry. Click here to view.
To clarify, where does the AFA stand on existing planners having to get degrees?
ANZ FP have made it compulsory for all existing advisers to have one by 2019, be interesting if the other big 4 follow suit.
Editor’s note: Thanks for your question, Mary. The AFA has recommended that existing advisers only be required to achieve an advanced diploma level (AQF6) qualification. We have updated our story to reflect this information.
With the qualifications that have been recommended by AFA are not what is currently happening. I have been a planner for 10 years I am now looking for a new role as a planner as I became self employed when the advice scandals broke. It has been a struggle so I would like to be employed to be able to support my family. I do not have a degree. I have been advised by CBA, NAB and numerous others they will not consider me for any planner position as I do not have a degree regardless of my extensive experience. They have even gone to the extent from their recruitment areas to tell me it is the law even though I advise I am an existing planner. Numerous recruiters I have seen take my cv and advise me I am now unemployable because I have no degree and will not consider me until I have a degree. In the meantime I have a family to support and unable to obtain even an interview. I have an excellent compliance record and never had any issues. Why are these organisations putting up such barriers when they can not even get these staff with degrees. See Seek and you will see the same jobs being advertised week after week from these companies and also from recruiters. Why are companies like NAB whom have had a major planner walkout because of the change in their bonus structures still persisting with a degree being mandatory even though they have a shortage of planners. Is there anything one can do in relation to this situation?. I am currently up-skilling but a degree is years away. I have also encountered numerous roles from employers and recruiters which I have applied for with requested qualifications for these jobs to be closed with no notification and readvertised with degree qualifications. After all the advice scandals surely industry experience should be considered and valued rather then be rejected for a candidate with a degree with little to no experience. Most of these advice scandals have been caused by management culture drive for revenue above everything and not by education standards. Please advise what I can do in the meantime while I am upgrading my qualifications? With what I have encountered would this be a form of discrimination? Your input would be greatly appreciated. Are in other existing planners encountering the same issues?
What is the AFA’s position on risk only advisers? Will they be required to complete the same educational requirements and pass the same registration exam as advisers who are licensed to provide full financial planning advice? Surely if an adviser is only licensed to provide advice on Life risk insurance, business insurance, and risk insurance written in super they shouldn’t be required to study and sit an exam covering material they are never going to provide advice on? In the words of Synchron’s Don Trapnell “The disciplines of financial planning and risk advice should be separated and the financial services industry should stop talking about the two professions in the same breath” (RiskInfo 30/01/2015). Are the AFA & FPA aware of the distinction and supporting those who choose to specialise and provide quality advice and care for clients?
Maybe AFA members need to sit a national exam due to the present level of member education. I would have thought attaining CFP and equivalent by study plus other relevant degrees and attaining ICA or CPA stands for something. Obviously the author is unaware of national exams such as CFP etc, or is this just a ” my association stands for this issue but I don’t really understand the issue”. Any replies based on fact most welcome. Maybe I will just do RG146, pass a national exam and therefore I am a brilliant adviser!!!!!!!!
Is a shame Small IFA Risk Only Advisers have been overlooked by all these organisations. I chose to be a Risk Specialist however am going to be forced to complete a holistic advice exam.
why is it that I can get a risk only licence from Asic but AFA won’t acknowledge this?
I thought the AFA knew that there should be a distinction between the different area’s of advice, will be hard to call someone a specialist if they provide advice in all areas including property etc.
So far i feel very little support from anyone as a small risk only adviser and will be damned if I am forced to join one or any of these organisations who care very little for what I do everyday for Australians.
Good luck getting someone straight out of Uni to knock on doors of small businesses like I do and provide them with Insurance only advice for a small amount of compensation, soon to be less….
I guess 10 years of Risk only advice, with no complaints, no compliance breaches and do only the right thing by clients making them advocates of the Life Insurance Industry will mean nothing because I didn’t go to Uni with the Rich Kids.
Joe Hockey says they care about small Australian businesses, but his assistant Treasurer makes no apologies for running our small Family business into the ground on behalf of Insurers Bankers and Unions. I guess small IFA risk only family businesses don’t count anymore once the decision has been made to get rid of us.
P.S, the big Banks do not employee planners without at least 5 years experience. So where are these people out of Uni going to get employed? the amount of training and costs to a small business to get a new planner up and running would be too much especially with falling revenue and increasing dealer fee’s.
So many issues that the industry is ignoring when putting forward all these recommendations, at least it takes the focus off banks and the poor investment advice business they were pushing. All focused on the little Risk only Advisers pay check who have done nothing wrong by anyone.
Firstly I have been an AFA member since 1988. I benefited from all those training courses the AFA used to have. Those courses started me on a never ending quest to further my knowledge and develop my expertise for the benefit of my clients
My AFA abandoned those “training ” courses about 10 years ago. There were mutterings from the then Board re the need to update courses, about the need to make them certifiable by the training gravy train which was then building up steam
My AFA has spent years trying to attract as members “holistic “advisers who should be with the FPA – their knowledge of risk is appalling. The AFA should go back to its roots and primarily represent those who make 85% of more of their remuneration as risk.
More than ever we need a professional body for RISK ADVISERS ONLY
Finally, before the AFA starts agreeing with those who would have risk advisers obtaining Diplomas which cannot benefit their clients, where the hell are the courses we should do. The AFA does not have to conduct the courses, but it should ensure real courses exist before it agrees to anything on my behalf
Well said BillB. Gave up on the AFA many years ago when they abandon specialist risk advisers because it wasn’t seen as fashionable. And the AFA also agrees that all advisers should belong to a professional body – of course they would say that. Unfortunately, AFA is no longer an appropriate body for a risk only specialist to be a part of. If I am forced to get a useless degree after spending 35 years in this business working for the benefit of clients, then I won’t be reaching 36 years.
I would have to disagree with you Paul that banks do not employ staff without 5 years experience. CBA in one case hired 12 university graduates – no experience. Within 3 months 11 had quit. NAB are happy with little to no experience for planner roles as long as you have a degree. Numerous other companies are adopting this as well. Most of these companies have been ideologically driven to higher qualifications even thought they can not get the staff at the standard they demand. The interesting point to ponder is when these planner positions remain unfilled and revenue drops will the realities of business and having to be commercial result in the current education standards such as degree being forced onto current planners with experience will be relaxed or if this is a strategy to reduce planner numbers? Remember it was the major bank scandals that have created this problem led by their revenue focus culture. Now there is the situation where there is no rationale to excessive increase in qualifications with no focus on revenue focus culture being addressed. This put existing planners at risk of being shut out of the industry like Angela. I believe as planners we should lobby our elected representatives and push for a royal commission into financial planning and the banks and their conduct. The managers responsible brought to account and banned from the industry instead of letting them transfer from one bank to the other.
I guess you are right Bob, I was speaking of knowledge from a few years ago, no doubt they want a Degree now and still struggle to hire and retain planners. I feel sorry for small planners now being pushed into bank positions, I’d work as a checkout operator before going back to a big bank. The Government should be supporting more IFA’s, but is the total opposite, but I’m not surprised they say one thing while doing another.
I became an IFA for some of the culture reasons you raised so I know what your saying, I remember very well. I got told they only cared about ” New Business” Only and not the existing client who had portfolio’s rapidly declining, that’s when I knew they were scum.
Good luck getting a royal commission into bankers, this is Australia, our bankers are too big to fail……….. and have a lobbyist per pollie.
The good thing is I know in my heart that the public’s poor opinions of Planners is not from small Risk advisers like myself, not matter how hard these special interest groups want to push that line.
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