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Calls for a simplified path to financial advice

Financial Advice Association Australia (FAAA) chief executive Sarah Abood said she supports recent proposals around adviser education from the Joint Associations Working Group (JAWG) because "we need far more people with these qualifications" and the current system isn't supporting that need.

Last month, JAWG proposed some core principles to strengthen the education standard for new entrants to the financial advice profession.

At the Stockbrokers and Investment Advisors (SIAA) conference, Abood said the FAAA's goal is to broaden the pool of candidates without lowering standards. It's crucial that the qualification requirements maintain the importance of a university degree and the proposals support that, she said.

"The current qualification framework works really well for a number of participants. We want to ensure that the current degrees and providers continue to offer those courses which suit many participants," she said.

Abood said an important aspect of the proposal is recognising core knowledge areas essential for all financial advisers, regardless of their specialty-whether stockbrokers, comprehensive financial advisors, or life insurance specialists. Key areas such as taxation, financial regulation, ethics, and professionalism are necessary for anyone advising consumers on financial products, she added.

The proposals aim to reduce the number of core knowledge areas required for everyone while increasing flexibility in completing the full degree. This approach aligns with the Treasury's suggestions from a paper issued in August 2022.

"The reason that we are all aligned is our united desire to see more flexibility in the qualification standards and access to a broader pool of candidates to increase numbers," she said.

SMSF Association chief executive Peter Burgess lauded the fact that instead of needing a second degree to meet the financial planning education standard, the proposal means members may only need to do some bridging units.

He said this is important because people often don't start their education intending to become financial advisers. Typically, they pursue degrees in commerce, accounting, business, or economics, and later decide to switch to financial planning.

He said requiring them to obtain a second degree and retake courses they've already covered, or study irrelevant subjects, is a significant barrier to entering the industry. The proposal acknowledged that.

"The proposal is about recognising that a lot of these professionals have already studied these knowledge areas, and they should receive credit or status for that towards a financial planning qualification," he said.

JAWG has recognised the need for more universities to participate in financial planning education, with Abood pointing out that none of the Group of Eight universities currently offer qualifications in this field. For instance, UNSW used to have a graduate certificate, but it's now closed to new entrants.

She noted these research-intensive universities educate about a quarter of all university students in Australia, approximately 425,000 people. This means there is a significant pool of students-around 110,000 graduates annually-that the financial planning profession cannot currently access.

Since these courses are not widely available, students would have to change universities and restart their education, incurring significant additional costs. This creates a high barrier to entry and limits access to high-quality students.

"If we're able to provide a path for those universities to also offer courses in this space, then that that brings us an opportunity to be speaking with a much broader group of students than we currently can," she said.

Read more: JAWGFAAASarah AboodFinancial Advice Association AustraliaJoint Associations Working GroupPeter BurgessSMSF Association