The Association of Financial Advisers (AFA) has thrown its weight behind calls for better transitional arrangements for existing advisers acquiring degree-equivalent qualifications, warning failure to do so could result in an exodus of experience from the financial planning industry.
The AFA's submission responding to the Government's discussion paper on professional standards in the financial planning industry warned that the impact of the proposed requirements for degree-equivalent qualifications "will cause a drastic decline in the number of experienced, quality advisers available to serve consumers through their retirement years".
"As directors of companies have best interest duties under the law, so too do financial advisers have a best interest duty under law to act in the best interest of their clients," the submission said.
It said education levels and exams would not change that best interest duty "for these highly experienced and effective financial advisers as it wouldn't for experienced directors and company leaders not possessing the degree level qualifications of their younger counterparts".
The AFA submission said it was widely documented that access to and participation rates of high school leavers in university courses was much higher today than it was a generation ago and, on that basis, it firmly believed that requiring an experienced existing adviser to achieve a university qualification would result in a significant negative impact to the operation of the industry.
"It is the AFA's preference that the government set the standards for existing advisers at the AQF 6 or equivalent assessment level in regulation as that would provide much needed certainty and clarity in the near term," it said.
The submission said that in the absence of the government being prepared to do this, the AFA would support the consensus view that the first standard includes equivalent competencies for existing advisers to be approved by the standards body.
"Older, experienced advisers who are already recognised with a strong and untarnished track record of giving quality advice, who have abided by professional association codes, and who have shown a long-term commitment to keeping their professional development current, should not be subject to unnecessary red-tape to re-validate their competence," the AFA said.
It said the prospect of thousands of quality, experienced advisers exiting early over the next three years was an extremely concerning consequence of the proposed framework if it is implemented without changes being made.