The financial advice industry is finally becoming recognised as a profession as the standards and education requirements are helping it to be promoted in the same way as law or accounting, according to Financial Adviser Standards and Ethics Authority (FASEA).
Speaking on the Association of Financial Advisers (AFA) Genxt podcast, FASEA standards director, Amelia Constantinidis said the industry previously had quite low requirements in terms of people coming on.
“We’re seeing more – and it’s been really encouraging for us to see – new entrants and enquires we’re getting in terms of those wanting to become a financial adviser,” Constantinidis said.
“We’re starting to see financial advice become recognised as a profession with higher education providers.
“Because of the approved degrees it is being promoted as another profession, like accounting, like law, which is fantastic and encouraging.”
Currently, 550 provisional advisers had enrolled in their professional year (PY) and 260 were expected to start this quarter.
Constantinidis said the hallmark of a profession was to have higher education and she was excited by the new entrants in the industry.
“We’ve seen great benefits for some practices that have really embraced [new entrants] and have brought on one or two,” Constantinidis said.
“And how they’ve shaped their business to have a better client outcome; that’s been encouraging and great to hear from my perspective in terms of how the PY standard is being implemented.”
An adviser doing their PY said their “mind was blown” when they found out, previously, that more training was required to be a hairdresser than a financial adviser.
“When we look at financial advice, one of the key things – and when I say this to people they say ‘oh, you’re right’ – most people used to become a specialist before becoming a generalist,” Constantinidis said.
“That’s not saying specialists aren’t valuable to their clients but in every other profession, you would become a generalist before you become a specialist.
“In terms of what the PY specifically brings to the industry, I’d cover that more broadly to say what do all the standards that we’ve just implemented bring to this industry and it is absolutely about professionalism.”
Looking at other professions, Constantinidis said they all had education requirements and ongoing continuous professional development.
“They do have a professional year, some call it an internship; they do have an entry exam, a code of ethics and some sort of enforcement,” Constantinidis said.
“Those are the key pillars of professionalism. All of those together give greater consumer trust and greater standing in the community as a professional.
“The Government’s original intention was to recognise financial advice as a profession by introducing all these standards.”