If the Financial Adviser Standards and Ethics Authority (FASEA) is serious about taking the vast majority of the financial planning industry with it on a meaningful journey towards professionalism then it must be pragmatic about the industry’s evolutionary history and inherent imperfections.
As the relatively new Assistant Treasurer, Stuart Robert, told the recent Association of Financial Advisers (AFA) national conference, there are seven non-negotiables which must flow from the FASEA process:
- New advisers will require a degree.
- There will be an exam, that starts next year and all advisers must complete it by 2021.
- There will compulsory professional development
- There will be a professional year
- There will be an ethics component
- There will be a recognition process for foreign degrees.
- All existing advisers will need to meet the FASEA requirements by 2024
Those seven elements were always going to represent a considerable challenge for many financial planners, and that is where FASEA will need to be pragmatic if it is to succeed in minimising the impact of its actions and the likelihood of a significant exodus of planners from the industry.
What Robert also told the AFA conference was that he had met with FASEA and, as the new minister, had agreed the following:
Existing advisers with no degree will not be required to undertake a bachelor degree, but will be required to undertake eight subjects, equivalent to a graduate diploma. Of these eight subjects
- Those advisers who hold an existing advanced diploma in Financial Planning will receive two subjects credit.
- Another two subjects will be credited in recognition of the education coursework to attain the designation of CFP (FPA) or FChFP (AFA) provided these qualifications were gained after a certain date. This is in recognition of the extensive work conducted by your association and the FPA.
- That leaves four subjects of which one will be Ethics.
Existing advisers with a related degree will have to complete three bridging courses on Chapter 7 of the Corporations Act, the new Code of Ethics and behavioural finance;
Existing advisers with a postgraduate degree related to financial advice, or a bachelor or postgraduate degree approved by FASEA, would have to complete one bridging course on the new Code of Ethics.
In doing so, the Assistant Treasurer made clear that what he had outlined was about all that was likely to be extracted from FASEA in terms of compromise and pragmatism noting that he believed what the authority would ultimately propose would be “sound”.
So, for financial planners the devil will be in the detail of what FASEA ultimately delivers – what previously-obtained degrees will pass muster and what foreign qualifications will suffice? Based on that detail they will be able to make objective decisions about their futures.
What planners can be sure of is that while the Government in the form of the new Assistant Treasurer has noted their concerns, it is not disposed to intercede to change the essential outcome.