An exclusive Financial Standard polling of the 2017 Association of Financial Advisers (AFA) awards finalists show overwhelming support for more stringent proficiency requirements – but the industry can still expect a major fallout from those who choose to close shop than adopt incoming educational reforms.

“They are more than fair. A consumer has a right to an expectation of a standard of education when they engage with a financial planner,” Excellence in Education Award finalist and Encompass Wealth financial strategist Helen Russo says.

The consensus was increased standards of education would engender greater professionalism and higher levels of trust and confidence in both financial advisers and financial advice, placing advisers in the same stead as accountants, doctors and lawyers.

AFA Adviser of the Year finalist Glen James from Fortify Financial says: “We need to get on with it and lift our game as a profession. There are no longer any excuses as time is on our side – if we act now.”

The incoming standards require all new entrants, from 1 January 2019, to be degree-qualified while all existing advisers will need to meet a level of equivalency by 1 January 2024, and all financial advisers will be required to pass a proficiency exam.

Uncertainty surrounding what exactly will constitute the level of equivalency for existing advisers is causing apprehension and it’s this anxiety that is driving many to contemplate selling their business.

Recent insight from CoreData shows 16.5% of older financial advisers plan to leave the industry in the face of these reforms.

For some advisers, the standards fortuitously come into effect around the time they anticipated retiring, simply causing them to engage succession mode sooner than previously planned.

However, Mentor Education founder and managing director Mark Sinclair believes others are delaying their preparation without warrant.

With more than six years to meet the standards, Sinclair’s calculations show that a Master of Financial Planning comprises 12 units, taking each roughly 12 weeks to complete.

Most will receive an average of four exemptions based on qualifications already attained, with the remaining eight units only requiring two years of study.

While the demands of academic study would undoubtedly place additional demands on time, the ultimate benefit to an industry striving toward professionalism is undeniable.

University of Sydney Business School academic Helen Parker says there’s a lot to be gained by completing further education.

“Learning should be a lifelong thing anyway – there’s no room now for nothing more than a 20-year old diploma,” she says.

Those still not convinced should begin weighing their options, to save working to the end only to offload their business at a fire sale price, Sinclair advised.

Published 9 October 2017
Jamie Williamson