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FINSIA urges FASEA to be clear with financial planners about new qualifications as many warn they will quit industry

by Lewis Panther | 06 Jul 2018
More than half the country’s financial advisers may quit because of new education requirements, a survey by FINSIA suggests. 500 FINSIA urgers FASEA to be clear with financial planners about new qualifications as many warn they will quit industry

Almost a fifth of those surveyed said they intended to walk away from the business rather than sit through courses and exams being recommended by the Financial Adviser Standards and Ethics Authority.

Another third of respondents are unsure if they will exit the industry when the new regime is introduced.

FASEA — set up last year to oversee training and ethical standards for licensed financial advisers — will require all advisers to meet its proposed education standards by 1 January 2024.

But FINSIA’s survey suggests the measures will lead to an exodus of professionally qualified advisers.

Many are confused and angry about whether their existing professional qualifications will be recognised by FASEA.

Advisers with years of experience but without a degree, or degrees other fields, feel most aggrieved their professionalism and expertise is being called into question, judging by scores of comments.

The end result will leave the public vulnerable — especially those who have been with advisers for many years — and at a very real risk of missing out on sound financial advice.

FINSIA managing director and CEO Chris Whitehead is urging FASEA to recognise previous experience and qualifications.

He said: “Financial advice has been the subject of successive waves of reform since the 2009 Ripoll Inquiry. 

“There is a sense that the goalposts have kept changing for financial advisers, and that the changes implemented are generational in character, but have been implemented in a short time span.

“The potential loss of long-serving advisers from the industry was noted to leave clients vulnerable, particularly in cases where they are advanced in years and have long-established relationships with their existing adviser.

“More weight should be given to experience with a clean record. 

The possibility of thousands of advisers walking away from the industry in the year when the financial services sector is under the spotlight of the Royal Commission has to be seen as yet another blow for public trust.

Mr Whitehead added: “FINSIA has received a high volume of correspondence from advisers who are concerned that the education programs they have completed will not be recognised as degree qualifications, or degree qualifications in a relevant discipline. 

“Advisers with professional qualifications such as the SIA graduate qualifications in applied finance and investment, and financial planning, or Certified Financial Planner (CFP) have low levels of confidence that their training, and often considerable years of professional experience, will be recognised by the proposed education pathways. 

“A chief concern for existing advisers is the impact of the proposed education pathways, reflected in intention to stay in the industry. 

“Overall, 18.6% of FINSIA advisers indicate that they intend to exit the advice industry when the new education requirements take effect on 1 January 2024, with a further 34.7% of respondents unsure. 

“Advisers with 21 or more years of experience (62.5% of survey respondents) are more likely to indicate their intention to leave the advice industry, with 26.3% responding that they will do so when the proposed education requirements come into force. 

“Among the members that FINSIA surveyed there was considerable confusion about whether their qualifications would be accepted. 

“This was found to be a particular issue for advisers with 21 or more years of practice experience who typically completed academic qualifications through the SIA in 1998 or earlier.”

Two responses sum up much of the worry shown by financial planners.

“The industry will have to be very careful that they will lose many very capable advisers who have been in the industry for a long time,” said one of our members. 

“I would suggest advisers who have been in the industry for over say 25 or 30 years and still are the backbone of many offices be given grandfathering until their retirement from the industry. 

“I know many who will leave the industry if they have to obtain a new degree as they obtained the required qualifications at the time many years ago. These are people you can not afford to lose from the industry at one time.”

Another said: “I have worked in finance for 30 years and of these years 17 in financial planning, there are not enough women advisers. 

“I took the SIA and Finsia pathway as it was more recognised and distinguished than the FPA. I feel the decision is not valid for woman over 50 as in my day degrees for woman were not as relevant and we worked our way up and studied part time. 

“I did 10 years part time studies getting a advanced diploma which lead me to the grad dip in financial planning. I am devastated with theses proposed changes.”

FINSIA is recommending FASEA 

  • Review the accreditation of the SIA Graduate Diploma of Applied Finance and Investment and Master of Applied Finance and Investment in recognition of their status as leading postgraduate qualifications, developed by the industry to enhance its professionalism.
  • Consult with industry on a framework for RPL to ensure consistency of approach and give advisers certainty. This framework should give avenues to recognise professional experience and postgraduate studies in applied finance and investment.
  • Tells financial advisers that RPL will be available recognising professional designations and educational qualifications.
  • Develops communication initiatives to inform consumers about the new standards and what they should expect from qualified advisers.

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