Continuing professional development (CPD) completed in previous years by experienced advisers is not an acceptable substitute for an approved tertiary accreditation, according to the Financial Adviser Standards and Ethics Authority (FASEA).
FASEA said when the changes to the education standards were introduced the Government intentionally did not include any grandfathering provisions for experienced advisers, only providing extended time for them to meet the requirements.
“The explanatory memorandum that was attached to the bill noted ‘the length of time that the adviser has been in the industry is not itself a relevant consideration. The body may, however, take into account the fact that an adviser who has been in the industry for a large period of time has completed more CPD courses’,” FASEA said.
“The memorandum supporting the bill and the PJC [Parliament Joint Committee] and FSI [Financial Services Inquiry] noted, however, that current education standards were generally below a bachelor level of study, were not applied consistently across industry and the rigor and quality of some training courses is questionable.
“Considering the known limitations and standards of CPD, FASEA considered that such training generally would not satisfy the raised standard as being equivalent to a bachelor degree level or higher qualification.
“Its recognition would not lead to a raising of minimum education standards across all financial advisers to Parliament’s approved minimum level of bachelor degree or higher or equivalent qualification.”
Some 99% of advisers have completed their structured minimum 40-hour CPD requirements based on the Australian Securities and Investments Commission (ASIC) Financial Adviser Register (FAR) as of 30 June, 2021.
Higher education
Over 56% of advisers on the FAR had an approved or relevant degree and approximately 50% of advisers who had no degree had received recognition for prior learning (RPL).
“Based on FASEA’s analysis of the FAR (acknowledging limitations as not all adviser education is listed or current on the FAR) there are 3,655 advisers with an approved degree and 7,169 advisers with a relevant degree (with approximately 3,800 with additional credits earned for RPL),” FASEA said.
A relevant degree typically included degrees with study in accounting, investment, economics, and law. They were not required to complete a full FASEA approved degree, but only three bridging courses and a capstone unit that integrated financial advice knowledge into a practically applied scenario.
There had been an 180% increase in FASEA approved university level course units being studied with 33,703 individual course unit enrolments across 27 universities and other higher education providers at the end of 2020, compared to 12,054 in 2019.
There was a 203% increase in the number of bachelor’s degree units being studied by an estimated 2,800 potential new entrants to advice from 5,548 units in 2019 to 16,817 units in 2020.
Postgraduate and bridging units were being studied by 16,886 existing advisers in 2020 up from 6,506 in 2019, an increase of 160%.
There was a 212% increase in the number of FASEA approved current and historical courses from 57 in 2018 to 178 in 2021.
There were over 67 current degrees and 54 bridging courses for existing and potential advisers to enrol in with further applications for approval being received and under assessment by FASEA.
Professional year
Over 200 licensees had one or more professional year (PY) entrants training under the supervision of an experienced adviser.
As of September 2021, there was 590 new entrants to the industry that had commenced their PY since January 2019 with enrolments increased from 47 in 2019, 209 in 2020 and 334 in the nine months of 2021.
“These advisers are helping build the foundations of a trusted, educated, and ethical financial advice profession,” FASEA said.
