In September 2023, the government passed amendments to financial adviser education standards and removed the requirement for advisers with more than 10 years’ industry experience and a clean disciplinary record to complete an approved qualification.1 Previously, financial advisers were required to complete a Financial Adviser Standards and Ethics Authority approved degree by 2026 to continue working on the sector.1 As a result of practical implementation issues, during the 2022 election, the government promised to address concerns about the education requirements for existing advisers and better recognise industry experience.2
Below, we unpack the details of the new experience pathway and how we think the industry has responded to its introduction.
What does the new legislation involve?
In recognition of financial advisers with more than 10 years’ industry experience providing advice between 1 January 2007 and 31 December 2021, the government has removed the requirement for experienced advisers to complete an approved qualification. To access the experienced pathway, advisers are also required to have a clean disciplinary record with no bannings, disqualifications or enforceable undertakings during their career.2
Experienced advisers will still be required to comply with other industry standards, including passing the adviser exam and continuing professional development requirements.3
Previously, non degree-qualified advisers were required to complete up to eight units of tertiary study to remain in the industry under the original education standards introduced in 2019.4
The amendments also allow for advisers who have previously left the industry to re-enter without having to hold a degree – as long as they have enough cumulative industry experience between 2007-2021.5
Introducing the laws to Parliament, Assistant Treasurer and Minister for Financial Services, The Hon Stephen Jones MP said they would provide a pathway for experienced advisers to stay in the industry.
“This means new entrants have the benefit of their experience through mentoring, supervision and employment. It also means that more Australians will have access to financial advice than would otherwise be the case,” Mr Jones said.6
The laws also allow the government to use a level of discretion around approving adviser degrees. Previously, only advisers holding one of a list of approved degrees were able to qualify as a ‘relevant provider’. If they did not hold one of these degrees, they would need to complete further tertiary study.7
Under the amendments, new entrants to the industry can apply directly to the relevant Minister to have their degree recognized, and education providers can confirm that a person has completed the requirements of an approved degree, even if it is not on the approved degree list.3
How has the industry responded?
The amendments have had a mixed response from the industry, with FAAA chief executive Sarah Abood saying the association was “disappointed” when the government confirmed earlier this year that there would be no sunset clause on the pathway.
Ms Abood pointed out this could allow younger advisers currently in their 30s to “practice indefinitely with no qualifications required”.8 An FAAA survey indicated members were divided on whether the pathway was a good thing, with 50.9% saying they were in support.9
What happens now?
Advisers who want to access the experience pathway will need to complete a self-declaration before 1 January 2026 - when the transition arrangements for the industry education standards end – and they or their licensee must lodge it with ASIC. If they have left the industry and want to return, they will need to pass the adviser exam.5
Mr Jones has said the new laws will hopefully stem the flow of advisers exiting the sector, but there will be further work to do on improving the education standards, which he has described as “nuts”.
“People don’t decide at the age of 18 that they want to become a financial adviser or when they are an undergraduate. It is people who have worked in a bank or as an accountant or who have studied a commerce degree and then decided they want to do advice,” Mr Jones said.
“There is a pathway to growing adviser [numbers] to 30,000 again, but we won’t get there in two years’ or five years’ time. We have to be pragmatic about it and have more doors at the university level, such as by recognising components of other degrees and ensuring there is a logical pathway.”10
1 Labor Govt would abandon uni requirements for advisers with 10 years. Money Management, 9 December 2021
2 Regulation impact statement: Education standards for experienced financial advisers. Australian Government, April 2023
3 Treasury Laws Amendment (2023 Measures No. 3) Bill 2023. Parliament of Australia 2023
4 Qualification, exam and professional development. ASIC, July 2023
5 Treasury Laws Amendment (2023 Measures No.3) Bill 2023: Explanatory memorandum. Parliament of Australia 2023
6 Treasury Laws Amendment (2023 Measures No. 3) Bill 2023: Second reading. Hansard, 14 June 2023.
7 Corporations (Relevant Providers Degrees, Qualifications and Courses Standard) Determination 2021. Australian Government Federal Register of Legislation
8 Experience pathway enters parliament. IFA, 16 June 2023
9 Wounding a profession, experience pathway passes Parliament. Professional Planner, 6 September 2023
10 Jones believes industry can return to 30k advisers. Money Management, 18 July 2023