Financial Planning
CFA Institute asks FASEA to recognise charterholders

The association representing CFAs is asking its charterholders be allowed to qualify as financial advisers, as FASEA overhauls the educational standards in the advice industry.

CFA Institute chief executive Paul Smith was in Sydney for a briefing that addressed the Royal Commission and its implications for the financial services industry.

The association made a submission to the Royal Commission that calls for codes of conduct, effective enforcement at an individual level instead of the industry level and an improvement in professionalism.

"A lot of that is now in the hands of FASEA obviously, [which is] thinking about the credentialing requirements in the ongoing continued professional education requirements that will be imposed on the market here in Australia," Smith said in his opening address.

Bar set too low

CFA Institute pushed for CFA charterholders to be recognised under FASEA's new licensing regime in a June submission to the education standards body.

"I always remember coming down to Australia five or six years ago when the FoFA legislation was new and talking to ASIC at that time about regulation and credentialing," he said.

Smith added he was "amazed" at how low the bar was set for credentialing and educational qualifications - and for people to enter this industry.

Smith said when it comes to regulation, Australia has always tried to reinvent the wheel instead of fishing for good global standards that the country might be able to import.

"We have the gold standard of investment credentials as far as the world is concerned. Will FASEA recognise the charterholders here in Australia as being appropriately qualified for local licensing conditions?" he said.

"One of FASEA's requirements is that all advisers have to have degrees. One country that has a very good ladder for qualification is the UK."

The UK's system looks at the CFA qualification and equates it to gaining a master's - so it's a higher qualification than a bachelor's degree, he said.

"And to become a charter holder you already need to have a bachelor's degree."

"So why wouldn't you allow for charterholders to be financial advisers here in Australia. It always seems that the bar is set lower than it should be," he said.

Will CFA charterholders go into advice?

A CFA makes an average salary of $101,000 a year in Australia while financial adviser makes an average $64,000, according to data collected by

Even if FASEA approves CFAs with an adviser qualification, will the charterholders be tempted by advice as commissions dry up and the industry goes through a structural change?

Smith thinks they will.

"We have had a good experience in the United States and in Canada," he said. "I think something like 35% of the CFA charterholders there are in private wealth advisory. That is a booming part of the industry."

He said as Australia's superannuation pool swells and people dip in at retirement, they will take that money out possibly in lump sums and will need financial advice.

Australia is also getting "wealthier and wealthier" and there's a lot of wealthy immigration into the country as well, Smith said.

"The opportunity for private wealth advisory here in Australia is huge," he said. "I don't doubt for a second that private wealth advisory will be a booming business."

Read more: AustraliaCFA InstituteRoyal Commission
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