Has the Change in Training Requirements for FP Advisers Prematurely Led to Industry Departures?

I have been reading with interest the varying commentary around the declining number of licensed financial advisers within Australia with a more recent piece reporting a decline in calendar year 2021 alone from around 21,000 to almost 18,000 advisers by year’s end. Reportedly, many of those retiring and leaving the professional have done so based of the need to complete further formal tertiary qualifications to remain licensed and continue to operate. We have experienced this firsthand, with numerous practitioners either discontinuing the provision of such services and handing back their licences in multidisciplinary firms, or selling up altogether.

Then, just prior to Christmas, both sides of politics seemingly endorsed a change in the educational requirements of financial advisers, enabling those with more than ten years’ experience to be exempt from obtaining the previously required tertiary degree. Instead, such parties will only have to complete a tertiary level unit on the Code of Ethics.

Upon reading this, it brought a wry smile to my face for a couple of reasons. Firstly, I was imagining all of the advisers who had been so diligent and already obtained the necessary qualifications, dedicating hours and dollars to the process whilst having to juggle the ongoing provision of their services, many of whom may now be benefited from this exemption.

My thoughts also turned to those who had already left the profession. For many, the thought of having to obtain such qualifications in their more mature years was simply impossible and unacceptable, thus it was the catalyst to jump ship and get out of the ‘game’ so to speak, in part resulting in the declining number of advisers. For some who did this begrudgingly, they are less than likely to be happy. Particularly where they sold their book of clients, at times at what may have been seen as a discount, as a means of realising some value from their years of contribution to the profession and their clients. I in fact wondered whether this may lead to legal action by any of those especially disgruntled by this news.

I was also bemused by the requirement to complete additional training in ethics. This always makes me laugh. I have completed multiple tertiary qualifications, each of which incorporated a unit on ethics. I often wonder to myself, ‘if I have done ethics once, what will be changed by doing it a second, third or fourth time’? Either I have ethics or I don’t, and I also find ethics quite subjective in some respects, in that what is ethical to one person may not be ethical to another. It can be quite grey. Yet, for these experienced advisers, after being in practice for 10 years or more, they need to be reminded or told what is ethical. Is ethics course really going to stop the financial adviser who acts unethically? I would say not. It’s the same in any profession.

It’s yet to be seen if this revision to requirements results in many ‘cheesed off’ past and present financial advisers, however I feel they could have good reason to be less than impressed, and I certainly feel that the prior education requirements prematurely led some to leave this profession.

As a side bar, one article suggested that to reduce the cost of financial advice to make it more affordable for the masses, adviser numbers had to increase. I thought part of that rationale was interesting and wondered whether a similar view would applying to accounting services. Would having more qualified accountants in practice lead to cheaper accounting fees? I’m not sure it would. However, that may be the case when it comes to audit services, who similar to financial advisers, although not to the same degree, have experienced a reducing number of registered auditors as more senior practitioners retire and fewer young accountants choose audit as a specialisation to follow. As such services become the domain of larger firms, it would perhaps be rational to suggest fees are likely to rise for this specific service.