'There is an agenda involved': Warning over exodus by financial planners
Financial advisers say they're still in the dark about what incoming education standards for their profession will look like, with warnings of an exodus from the sector.
The Association of Independently Owned Financial Professionals claims the transition to new minimum education requirements for advisers has been unfair on existing professionals and the timeline for getting new qualifications will cause many to shut up shop.
"We believe there is an agenda involved to get as many advisers out [of the sector] as possible in the shortest period of time," association's executive director, Peter Johnston says.
Looming deadline
The Financial Adviser Standards and Ethics Authority (FASEA), established last year by the Turnbull government, is currently reviewing consultation on the final minimum education standards for financial advisers in Australia.
The organisation was created in April 2017 and was charged with deciding new minimum standards for financial advisers in an attempt to weed out bad advice.
Consultation on the proposed new education levels finished at the end of June. Under the draft plan, new financial advisers must have an approved degree by January 1 of 2019 in order to practice.
Advisers already working in the space but who do not have a degree would have to complete an approved graduate diploma or undertake other bridging programs by 2024.
There will also be a new financial adviser examination.
Johnston says the short timeframe and uncertainty around new professional requirements means around 10,000 financial adviser businesses getting ready to exit the space.
Impact still unknown
Others say there’s no need to panic just yet, but it does look like a chunk of the existing financial planning community may look to leave the sector.
“It's unlikely we were going to have any firm answers until the end of the year, and at this stage, until the standards are set, everything is just unknown,” says head of policy at the Financial Planners Association of Australia, Ben Marshan.
Australian universities will potentially have to create new courses adhering to compliance requirements once the standards are decided, he says.
Marshan believes the timeframe businesses will be given to complete further required study are reasonable, but many of his members have said they may look at other jobs in coming years.
“We’ve surveyed our members, up to 40 per cent have said they may look to leave,” he says.
Head of policy at the Association of Financial Advisers, Phil Anderson, says while it's clear reforms had to take place, his organisation is "quite concerned" many will leave the profession in the face of anxiety abut the new rules.
"The response [from planners] at the moment is a great deal of concern and anxiety," he says.
The Financial Adviser Standards and Ethics Authority has been contacted for comment.