The Financial Planning Association (FPA) has rejected a federal government proposal to create an experience pathway to keep existing financial advisers in the industry as it would be inconsistent with the minimum education requirements already in place.
However, if such a model was adopted it should only be applied to older advisers with at least 15 years’ experience with an end date for the pathway of a decade after its introduction.
The rejection of the experience pathway, proposed by the government and opposition, forms part of the FPA’s submission to Treasury on adviser education standards and FPA chief executive Sarah Abood said it undermines the work advisers have undertaken so far to lift education and professional standards.
Abood said while the recognition of experience was a part of the competency needed to provide advice, education was also “universally identified” as an important component of professional competence.
“It’s so important to maintain the gains our profession has won and keep the trust of consumers,” she said.
“We cannot return to the days when a planner could technically be qualified with only a two-day course, with no time frame for that to change.
“For this reason, the FPA does not support the proposed 10 years of experience in the past 12 years pathway as proposed.
“We believe this is an insufficient foundation to meet the objectives of raising the minimum education requirements for the financial planning profession, while also continuing to build consumer confidence in the profession.”
In its submission, the FPA stated that if the government was to adopt an experience pathway, “it should be based on 15 years’ experience in the last 20 years to broadly align with when the legacy education standards ushered in under the Financial Services Reform Act commenced in 2001 and cater for those with non-standard work patterns”.
“It should be limited to practitioners who are over the age of 55 and are more likely to exit the profession over the next decade, but have significant experience, positive client engagement and competence to provide advice,” the submission stated.
“And it should have a 10-year sunset period after which they should exit advice provision if they have not undertaken the experience competency assessments.”
The FPA’s suggested approach would still recognise the experience of existing advisers with long industry track records, while also ensuring all practitioners will become tertiary qualified to a graduate diploma level within a reasonable period, offering more flexibility for more experienced financial planners, she said.
“We believe there is also room for a conversation to be had about specialisation and competency frameworks as part of the upcoming Quality of Advice Review. For those planners whose practice lies exclusively in a specific area (such as personal risk), we think there’s scope to allow for the training and education requirements to be more targeted than is currently the case,” she said.
The FPA’s position runs counter to that of the Association of Financial Advisers (AFA) which has proposed a number of different experience pathways based on the time an adviser has been working in the sector.
