ASIC’s Financial Adviser Register (FAR) currently boasts 16,356 advisers, but according to the latest estimates, less than 50 per cent are expected to benefit from the government’s education reform proposal.
Namely, the government is currently consulting on a plan to remove the tertiary education requirements for financial advisers who have 10 years’ experience, a clean record and have passed the relevant exam.
The government’s consultation paper states that to be eligible, each adviser must have at least 10 years’ experience up to 1 January 2019.
In order to ascertain how many advisers this proposal could benefit, Wealth Data dug into the numbers and found that a total of 8,695 advisers had 10 or more years’ experience as at 1 January 2019. However, of that number, 14.1 per cent boast an approved qualification, meaning that the government’s reforms would benefit the remaining 7,469 advisers.
However, these calculations are complicated by the government’s definition of “experienced advisers”, namely according to the consultation paper the 10 years of experience doesn’t need to be consecutive and could have been gained anytime between 1 January 2004 and 1 January 2019.
“There are quite a few other factors that need to be considered in terms of how many advisers will benefit from the proposal,” said Wealth Data director, Colin Williams.
Firstly, he noted, with the exam deadline unchanged from 30 September, adviser numbers are expected to dip below 16,000 in October.
“Lastly, the date for the approved degree requirements is January 1, 2026. It is very likely that many advisers who commenced pre-January 1, 2009 will retire by that date,” Mr Williams pointed out.
According to Mr Williams, the sector that will gain the most from the government’s proposed education revamp will be the financial planning sector where some 48.8 per cent or 2,952 advisers lack a degree.
News of the government’s consultation on financial adviser education standards was met with a mixed reaction.
Namely, while the Association of Financial Advisers welcomed the news, some were disappointed that the exam deadline remained 30 September.
“We were hoping for a 12-month deferral of the exam, a removal of the ambiguous ethics content, and inclusion of questions around competency of their advice specialty,” the Association of Independently Owned Financial Professionals’ (AIOFP) executive director, Peter Johnston, told ifa.
“To be fair, the minister did not specifically promise any exam changes, but we will however continue with our lobbying activities until October 1st in hope of a change of mind.”
Submissions are now open and will close on 16 September 2022.
