The conditions academics have urged on ‘experienced pathway’

Mike Taylor

Managing Editor and Publisher

21 August 2023

Financial planning academics told the Government they believe the Financial Adviser Register (FAR) should differentiate between advisers who are practicing because of the ‘experienced pathway’ and those who have not.

The Government has yet to reveal the final shape of its legislation delivering the so-called ‘experienced pathway’ but it has made public the submissions commenting on its exposure draft legislation and that from the Financial Planning Education Council (FPEC) makes clear the view of academics.

The submission, authored by seven academics and supported by more than 40 others, says that clients and consumers would be interested to know if their advisers holds appropriate formal qualifications, and this could be highlighted in the Financial Adviser Register.

If the requirement to complete formal study is removed, we believe we need to have the means to recognise and differentiate those advisers who had completed the additional qualifications from those who have used the experience pathway.

Further, the submission said that “if the requirement for existing advisers to hold a FAS-approved qualification is to be removed, we recommend, as a minimum, that all advisers seeking to take the experienced financial adviser pathway be required to complete a FAS-approved bridging ethics unit”.

“If existing advisers applying under this education pathway do not undertake a formal qualification, but rather rely on their experience as demonstrating competency, we strongly recommend the inclusion of a sunset clause to place a time limit of ten years on existing advisers to utilise this pathway,” it said. “This will contribute to ensuring that consumer trust in financial advice as a profession is not diminished.”

The submission also argued that the 10 years’ experience criteria proposed in the exposure draft legislation be client-facing.

“The adviser should be required to demonstrate ten years’ experience in a client-facing adviser role, working with clients to develop goals, objectives, and needs and utilising their knowledge and skills to develop appropriate strategies, product comparisons and recommendations. A broad requirement of ten years’ full-time equivalent work experience is insufficient to demonstrate possession of the appropriate knowledge and competencies required of a professional financial adviser. We also believe it is important that the scope, quantum and quality of the adviser’ experience be documented and assessed by the AFSL holder.”

“Finally, we would recommend some form of independent attestation of an adviser’s clean disciplinary record, rather than simply relying upon the adviser’s self-declaration. We recommend this be undertaken by the Australian financial services licensee who authorises that adviser as their representative.”