In a submission to the Financial Adviser Standards and Ethics Authority (FASEA), the SMSF Association said if the education thresholds are too high under the new standards, particularly for existing advisers, this may “cause damage in the short to medium term for the financial industry”.
“An adviser exodus from the industry is a risk that is posed under this circumstance,” warned the submission.
“If advisers believe that the time, cost and effort to become appropriately qualified under FASEA’s pathways [are] too extensive it may cause significantly experienced advisers to exit the industry.”
The submission stated that it’s advisers with the most experience who are most likely to leave the industry because of their proximity to retirement.
“Older advisers may be disenchanted by the fact their experience and accreditations are not adequately recognised, the amount of time and cost that will go into study and the fact they may be forced to restudy subjects they have met the learning outcomes for,” it said.
An adviser exodus, it said, also has the potential to lower the quality of advice given, as the remaining advice demand is met by advisers who have less experience.
“It may also result in a loss of experienced mentors for younger advisers. Furthermore, a lack of advisers may mean the Australian public’s need for financial advice is not satisfied as well as it could be,” it said.
The SMSF Association said FASEA should explore a framework for older advisers who are approaching retirement and to whom a degree and graduate diploma study are unreasonable propositions given the time and cost requirements.
“For example, one potential design would be to allow financial advisers who are 60 years of age or older as of 1 January 2024, have over 10 years of experience and have significant recognised prior learning to be eligible to undertake a bridging course rather than the formal studies for advisers without a degree,” the submission said.
“We would support arrangements as such with a caveat that these advisers would be subject to a sun-setting date by January 2030. This would see advisers continue practising until their retirement. If advisers wanted to consider longer term practising then they would be forced into the other FASEA pathways.”
I would argue that the skills to give sound retirement advice are HIGHER than the new standards! To amortise a retiree’s capital over an uncertain time frame (e.g. age 65 to 90+), through uncertain future market conditions and uncertain future inflation is an actuarial problem. The actuarial study course is like that of medical specialists.
A better solution may be that older advisers become pure client managers and delegate the formal advice generation to younger specialists – who leverage technology to assist large numbers of clients.
In my experience the client relationship is a major, time-consuming component of advice, and then the advice formulation is also a major part. But they don’t need to be done by the same person. Like a GP and Consultant.
So what would a person do if they didn’t have the luxury of having a younger advisor working for them such as a sole practitioner. You seem to base your response solely at larger organisations.
When it comes to accountants giving financial advice (in small volumes) an exodus may not be a disaster. One wise minister said “if you’re too small to comply then you’re too small to run an advice practice”
Like most aspects of the SMSF sector, efficiencies and quality come from specialisation (audit and actuarial certificates are good examples). Advice is the same. It’s best to refer to a specialist online advice service than try to become one. Let the specialist meet all the training requirements!
Well said Annonymous and my thoughts precisely. I have spent my whole working career in super and done every exam going including uni so why would i go back to uni again now. This bureacracy has destroyed the smsf business .
Just ask your clients if they want to start paying the huge fee hikes needed to cover all this. They will not and why should they.
I have decided to close ymthe curtains like many others. It just is not worth all the investment in time and extra expense for one more piece of paper on the wall.
The views of the SMSF Association continue to confuse this observer. A brief summary of recent events reveals the Assoc slammed the govt over Actuarial Certs stating their removal will “eradicate independence and integrity” when most industry experts agreed they were superfluous and unnecessary. The Assoc then supported the removal of annual audits almost immediately with the Chief Executive stating SMSF audits are “red tape”. Again most in the industry had an alternative view. Now, after years of issues in the advice space culminating in a Royal Commission, the Assoc is suggesting a sunset clause of 2030 would be more appropriate. Keep Act Certs, remove audits, allow those without proper quals a 12 year exit period. Mind boggling stuff. Are these really the views of the membership? If so, the membership will decline and disappear as practitioners are saying something different. Can’t wait for the 2019 Conference!
No, no, no. The government should not build a framework for exemptions, they are the ones trying to bring a greater degree of professional to advisers as a whole. How about we build a framework and finally take responsibility for increasing standards. If you have the experience then do the exam and show everyone your experience counts. If you can’t pass the exam then perhaps your experience doesn’t count as much you think it does.
There are other ways of running a smsf advice business without being personally licences, time to get creative.
I feel that having a degree does not always result in better advice, however there needs to be some method for older and experienced advisers to retire gracefully and not withdraw their experience and mentor-ships. The change of formal study has been constant over the period dictated by the regulators and clients. Look after experience and work to a sunset time frame for older advisers.
Why would the exemption be age based. I’m 38 have a business degree and FP diploma. There is nothing I can learn from going back to uni and I simply won’t waste my time and money getting a worthless piece of paper. I have a business to run, clients to help, mortgage to pay and family to provide for. I have no free time as it is.
I, along with the majority of the experienced advisers will just have to change jobs and go work directly for the product providers and cease giving financial advice.
Who would want to be an adviser these days anyway with all the rubbish compliance we are burdened with when backpackers working for call centres can sell insurance and super under general advice with no training or compliance
Well said, I’m in the same position but age 45.
Plus with Specialist SMSF and Estate Planning education too.
Over Complicated ODwyer and her govt morons have zero concept of reality and zero respect for past education and experience.
ODwyer is staggeringly arrogant.
Look at the absolute mess of complexity she made of the super changes. Fair policy to limit amount of tax free super pensions but to dump that on the industry without consultation is unbelievably stupid and insanely arrogant. And thus the crazy costly complexity now having to be dealt with.
ODwyer is a disaster !!!!!