The experience pathway could soon be passed, according to Minister for Financial Services Stephen Jones, and new education pathways are needed.
In a recorded message for the AIOFP conference in Bangkok, viewed by Money Management, Jones discussed the proposed experience pathway which was introduced in June.
Schedule 2 of the bill amended the Corporations Act to deliver the government’s election commitment to better recognise the experience of existing financial advisers as equivalent to tertiary study. It also addressed technical limitations in the current framework, relevant to both new entrants into the financial advice industry and tax agents providing a tax (financial) advice service to retail clients.
Jones said: “This legislation was introduced in June and I am confident it will pass through parliament soon. This is a pragmatic solution which will keep good advisers in the industry.”
Peter Johnston, executive director of the AIOFP, said: “We are also pleased that the minister expects the education pathway’s 10-year rule will pass through both houses at the next sitting of parliament.
“When we first presented a case for this proposed direction to the minister in 2020, we pointed out that the advice community will be losing thousands of highly experienced advisers and that will ultimately impact heavily on consumers who need advice.”
Last week, Money Management wrote how Jones believes the number of advisers can grow from less than 16,000 now to 30,000. Elaborating on this, the minister confirmed these will likely be advisers at institutions such as superannuation funds.
“It is critical we have advisers and that we get more advisers into the industry.
“We need to make sure there are enough information points right across the sector, there are 16,000 advisers and even if we double this number, it won’t close the advice gap. Many consumers have simple advice needs which could be provided by institutions with the appropriate guard rails.
“For more complex needs, we must have quality advisers, lots of them, who can provide fit-for-purpose advice to their clients. This will be good for Australians, good for advisers and good for the country as a whole.”
However, he feels the current education standards for new entrants to boost industry numbers, which were introduced by the Financial Adviser Standards and Ethics Authority (FASEA) are “not up to scratch”.
“I am also determined to improve the entry points for new advisers and while I am committed to professionalisation, the current pathway, a legacy of FASEA, is not up to standard. I want to ensure the educational standards make financial advice a career choice and lead to high quality advisers coming into the profession.”
No amount of university education can be as valuable as experience. Financial calculators do a lot of the numbers now, but don’t equate to an understanding of life events over an adult’s life journey. I doubt that many of those with over ten years experience will ever work for a superannuation fund. We would know that to be selling out our values and ethics. Experience taught us that. Too late for me anyway as I have already exited the industry that I loved.
Yes, in 5 years there’ll be 20,000 advisers (incentivised sales reps) working for industry funds flogging their product without having to write and SoA or keep documentation of any kind. The only product they’ll recommend is their own fund. The industry funds, labor party and union movement will all be cheering. They’ll be soaking up more and more member money for their own socialist agenda. The advertising campaigns for industry funds will go through the roof. I can just see it now, “Free Financial Planning”, “No adviser fees or commissions” and so on and so forth. What a total joke! To my way of thinking the Labor Party, Industry Funds and Unions are collectively Australia’s version of the Mafia.
Labor and Minister Stephen Jones have just ensured all the issue from the past will be repeated.
Product providers using financial advisers as a pipeline to create or keep business – check.
Keeping education standards low – check.
Taxing smaller independent firms out of business with compensation schemes, PI requirements and a great big ASIC tax – check.
Sad event…we had an opportunity to become a profession and the benefits that entailed, and we lost it. Spoiled by a few rogue advisers, too lazy, too self-centred…always thinking about the BMW, starting their posts with the line “I” or “Me” never thinking about the “Us” or “we”.