The Advisers Association says there are two problems currently facing the advice industry – the short-term exodus of advisers and recognising advice as a profession – and it’s asking which of these problems Treasury is attempting to resolve with its recent consultation paper on adviser education standards.
TAA CEO, Neil Macdonald says if it is both problems “…what trade-offs are acceptable?”
The association points to Treasury’s release of its Financial Adviser Education Standards Consultation Paper and Macdonald says that 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.”
He says that 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.”
Macdonald adds that consumers face a massive advice gap with the industry losing 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. (TAA says the consultation paper suggests advisers to 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
- Have a sunset clause for those advisers to either have the relevant qualifications by 30 June 2030 or 2035, or exit the profession
…it needs to be recognised that a lot of advisers “…just got on with it”
Macdonald says that it needs to be recognised that a lot of advisers “…just got on with it.”
“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.”
TAA will be making a submission in response to the consultation paper.
Neil, I don’t know if you’ve been misquoted but I just wished to clarify a point: The occupation, as a whole, does not need to be degree qualified to generally represent a profession. This statement is not empirically correct. Throughout the 19th and 20th centuries, as specific occupations underwent a change, (professionalization is often quoted in the literature representing this process), ‘old skill and knowledge”, represented by existing practitioners, remained without upgrading degrees but continued on the path of continual professional development. No existing members of the new professions were required to go back to university to obtain a degree to continue practicing. THE MATERIAL impediment to progression to a profession is not whether existing advisers be allowed to continue practicing without a degree, but 3 things and “3” things only (so far as education goes): (1) existing advisers continue to develop their skills through whatever training is required to ensure that professional judgment is duly executed, (2) Existing and new advisers meet acceptably high standards of practice and (3) all new advisers entering the industry meet specific benchmarks of education to enable effective and consistent credentialing across the entire profession. If these three points are adhered to there will be no diminishing of professional status due to “old Talent” in the profession not holding a relevant degree.
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