Adviser education changes – hot mess, slow burn
ANALYSIS
When the Albanese Government first came to office in 2022 the then Assistant Treasurer and Minister for Financial Services, Stephen Jones, announced a commitment to legislating for the so-called ‘experienced pathway’.
Jones’ pre-election promise was delivered against the background of the mess created by the Financial Adviser Standards and Ethics Authority (FASEA) which ceased operations in December 2021 but left a legacy of a narrow gauge, academically self-interested adviser education regime.
All things considered, Jones’ promise should have resulted in quick wins for the Albanese Government in its first term via the recognition of a broader range of degrees than that prescribed the discredited FASEA.
More than three years’ later, Jones’ successor in the portfolio, Daniel Mulino, has finally initiated a Treasury consultation which should deliver the change that financial advisers and their representative bodies actually wanted back in 2022.
Plenty has changed in the interim, and the Treasury consultation paper on Education Reform for Financial Advisers needs to be viewed against the exodus of financial advisers from the profession over the past four years notwithstanding the ‘experienced pathway’ promise and the yet to be fully translated Delivering Better Financial Outcomes (DBFO) legislation.
It may have taken years to get to this stage, but Treasury should be congratulated for having encapsulated the problem with the current arrangements with its description of the current standard:
“The current qualifications standard is complex and lacks flexibility and has not been effective in supporting a sustainable pipeline of new financial advisers entering the profession. It is unattractive to school leavers due to the restrictive career path and requires a significant investment in study for career changers. Over the past year, several HEPs have discontinued financial advice courses due to low enrolment numbers, making them financially unviable.
The Government has received consistent stakeholder feedback that the existing framework is not effective because of:
- High barriers to entry:
- Lack of recognition of relatable work experience and completed qualifications such as commerce and economics.
- Significant time and financial costs to complete an approved degree.
- Overly prescriptive curriculum:
- Significant time required for HEPs to create new courses and seek accreditation.
- Lack of flexibility for HEPs to structure their courses to best deliver content.
- Requires the study of all technical competency areas (superannuation, investments, insurance/risk and estate planning) when not all financial advisers provide personal advice across all those areas.
- Administrative burden:
- It is a time consuming and burdensome process to update the Determination to add new courses or make administrative updates (such as unit name/code changes). This has adversely affected students who have completed an approved degree but do not meet the qualifications standard due to minor technical discrepancies in unit names or codes.
The following represents the Treasury’s preferred course of action:
Requirement 1: Bachelor degree or higher
Requirement 1: A new entrant must hold a completed Bachelor degree (AQF Level 7 or higher) in any discipline from an Australian HEP.
This requirement recognises the value of tertiary education in developing transferrable skills from across different disciplines such as critical thinking, communication, analytical reasoning and problem solving. These skills are essential for financial advisers in formulating financial strategies and building strong client relationships.
The requirement to hold an AQF Level 7 degree or higher ensures rigour in the entry standard into the financial advice profession.
While the requirement is for an AQF Level 7 or higher qualification, it is noted a Graduate Certificate (AQF Level 8) would not satisfy the requirement despite being a higher qualification, due to the limited course breadth and volume of learning relative to a Bachelor degree.
Requirement 2: Financial concepts subjects
Requirement 2: A new entrant must complete at least four subjects at an AQF Level 7 or higher in financial concepts drawn from a proposed list of financial concepts study (see Figure 3).
Requirement 2 is informed by the designated areas of study defined in the current Determination and stakeholder feedback about how different financial concepts can be covered across a broad range of subjects from different disciplines.
The list is designed to target the relevant skills required by financial advisers yet sufficiently broad to allow Australian financial services (AFS) licensees to assess completion of the required financial concepts subjects without relying on a prescriptive Determination.
New areas such as fintech, trust law and mathematics/quantitative analysis have been included to future proof the list and ensure relevant skills across both law and finance are captured.
A person who holds a degree without any completed financial concepts subjects will be required to complete these subjects separately or through a different qualification.
Figure 3: Proposed list of financial concepts study
| Financial Advice Principles and construction (including advice related fintech) | Finance and Finance Law |
| Superannuation and Retirement Planning (including SMSF) | Banking and Investments
|
| Insurance Planning and Risk Management | Accounting |
| Aged care advice | Economics/Econometrics |
| Estate Planning and Estate Law | Actuarial Science |
| Trust Law | Mathematics/Statistics |
| Taxation and Taxation Law | Agribusiness/Agricultural economics |
| Business Law and Commercial Law |
Requirement 3: Accredited financial advice subjects
Requirement 3: All new entrants must complete four prescribed and accredited financial advice subjects approved by the Minister at an AQF Level 7 or higher.
The proposed list of accredited financial advice subjects is set out in Figure 4.
Figure 4: List of proposed accredited financial advice subjects
|
• Ethics for Professional Advisers • Financial Advice Regulatory and Legal Obligations • Client and Consumer Behaviour • Financial Advice Fundamentals
|
The proposed accredited subjects will retain the three existing bridging units – Ethics for Professional Advisers, Financial Advice Regulatory and Legal Obligations and Client and Consumer Behaviour. These subjects are essential to ensuring advisers can understand and apply the Code of Ethics and meet regulatory requirements, navigate complex financial scenarios and interact effectively with clients.
The new subject Financial Advice Fundamentals would provide new entrants with foundational knowledge and skills in technical competency areas such as insurance, investments, superannuation and estate planning. This foundation would support new entrants to commence their career and could be further developed through on the job training and the AFS licensee’s obligation to ensure their advisers are adequately trained and competent to provide advice.
The completion of the four accredited financial advice subjects would not also be counted towards the four financial concepts study requirement, as it is intended all new entrants should commence their career with the same baseline level of knowledge.
Huh? This is ultimately no different than the current arrangement, which requires new entrants with a non FP degree to complete an 8 unit Grad Dip FP.
Besides which, the current qualifications standard is NOT the real barrier to more new entrants. The real barrier is the swathes and swathes of bad regulation, which makes it too complicated and expensive to provide professional advice to most consumers.
Mulino has provided a “solution” that is not significantly different to what’s already in place, to a problem that has completely different root causes. What a ridiculous time wasting distraction. Is Mulino, like Jones before him, trying to do as little as possible while waiting for a cushy taxpayer funded job in Paris?
100%
This industry is like the twilight zone.
It’s the red tape and the inherent root cause is VERY EASY TO FIX.
So fix it !
The difference is that first 4 subject qualification will already have been ticked off in some entrants undergraduate degrees if they did economics commerce or finance. So only 4 subjects probably required if you have the right background. Having said that hard to operate from scratch if you havnt studied the superannuation stuff and financial advice principals so these changes are actually very minimal and won’t move the dial much at all.
Doing 8 units of a Kaplan masters while learning the ropes at a firm as a CSM for a new entrant graduate is not actually that difficult.
Under the current system most commerce graduates would get one or two RPL exemptions for a Grad Dip FP anyway, for subjects like tax and investments. This so called “new” system has very little difference to the current one in practice. It’s been designed as a press release, for a minister who’s done nothing of substance in his portfolio and appears unlikely to ever do so.
This reform is long overdue and its significance cannot be overstated. The FASEA education regime was designed with far too much input from universities who saw a purpose-built financial planning degree as a new enrolment pipeline. The market delivered its verdict — enrolments were so poor that several universities have since discontinued their courses entirely. The reason is simple: eighteen-year-olds don’t decide to become financial advisers. They pursue broader degrees in commerce, finance or economics, go out into the world, and then decide where to commit themselves. FASEA shut the door on precisely those people, and the profession has paid for it ever since.
What Treasury is now proposing is elegantly practical. You need a bachelor’s degree in any discipline, plus four mandatory accredited subjects and four financial concepts subjects. But if you hold a commerce or finance degree, you’ve very likely already covered the financial concepts through your existing qualification. For many graduates, the pathway into advice is potentially just four units of study. And if you’re a 40-year-old career changer with a degree, the same applies — you’re four units away, not a full degree away. That is transformative.
This matters because the profession is in a death spiral. We’ve gone from roughly 28,000 advisers to around 15,000. If 1,000 leave each year and only 500 enter, adviser numbers shrink relentlessly, the cost of advice rises, and financial advice becomes the exclusive preserve of wealthier and wealthier Australians. This reform finally addresses the pipeline problem at its source.
Treasury deserves credit for getting the substance right. But Stephen Jones promised this in 2022. It’s now 2026, and thousands of advisers have left in the interim. The substance is right, the timing is years too late, and the profession has paid the price. Better late than never — but only just.
Has anyone in the government or treasury spoken to anyone in the real world. Education standards are one of many reasons why no one wants to become a financial planner. Unless items such as CSLR levy, Adviser Levy, yearly opt ins, massive amounts of regulation and the overall demonization of the financial planning profession are addressed this proposed change will not result in one single new entrant to the profession. What a complete waste of everyone’s time.
Agreed.