Profile Financial Services managing director Phillip Win said that under the new standards set by the Financial Adviser Standards and Ethics Authority, financial planners who do not hold a related degree will need to undergo considerable additional study to meet the proposed FASEA standard by 1 January 2024.
“Even if a financial planner holds a related degree, they will still need to undertake a bridging course of three subjects, covering Chapter 7 of the Corporations Act, the FASEA Code of Ethics and a course of behavioural finance,” Mr Win said.
For many of the advisers at a mature stage of their working lives who are already considering retirement, the FASEA requirements will accelerate that, Mr Win added.
The industry may well be the poorer due to the drain of corporate memory, the MD said, and these clients will also need to be transitioned to a new financial adviser who is suitably qualified under the FASEA standards.
“The businesses of those retiring will need to be sold. This will require finance from a banking sector that has made it clear will be harder to borrow money from,” Mr Win said.
“The appetite for banks to lend to the financial planning sector is low, especially when you consider they are now looking to divest their wealth management businesses.”
Mr Win said this could lead to a change in the demand and supply dynamics of advice businesses and could impact practice valuations.
“If the sorts of numbers reported elsewhere in the media are true — some suggesting over 50 per cent of planners may exit — this demand and supply imbalance could threaten the very thing financial planners have worked with their clients over the years to achieve: their own financial independence,” the MD warned.
Mr Win said financial advisers will need to assess whether they wish to undergo the additional studies to stay in the industry.
“They will need to balance their existing work and family commitments with study requirements. Some may choose to exit, while others will take on the challenge,” Mr Win said.
“The dynamics noted for planners close to retirement will play out for those choosing to not take up the study challenge, accelerating turnover in our industry.”
Broadly, there has been significant backlash to the FASEA guidance from associations, consultants and advisers alike.
“Broadly, there has been significant backlash to the FASEA guidance from associations, consultants and advisers alike”
So the Financial Planners who were loudly shouting that accountants must get licensed and training are now objecting to similar standards being imposed on them. More then half the professional have been cruising along, many with limited study and qualifications, and now have to obtain professional standards to continue.
Sauce for the goose and all that.
agree I am out of here, wish I had sold a couple of years earlier. The lead foot on compliance, ever increasing costs and clients not exactly lining out of my door. Sad they have destroyed this industry.
A scenario so regulated where no one wants to operate in the sector so clients will be left with a smaller pool of advisers and higher costs.