Up to 70% of Australian financial advisers will need to start some form of further education that needs to be completed by 1 January 2024 if they want to continue giving advice to consumers thanks to new Commonwealth Government regulations.
An astounding 48% of Australian financial advisers don’t have a degree, while another 20% don’t have a degree in a related field. In total, more than 17,000 financial advisers will require detailed further education.
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This may result in substantial leakage from the industry with advisers opting out rather than continue with further study, especially those with decades of industry experience.
The Financial Adviser Standards and Ethics Authority (FASEA) are overseeing a transformation within the financial services industry to ensure better education is available for all its members, thereby resulting in better financial advice to the wider public.
From now, all existing advisers who don’t hold a relevant degree will need to undertake a Graduate Diploma (eight units AQF8) or equivalent. There is expectation that FASEA will grant credits to some individuals depending on their qualifications.
For those that have a degree or higher in a related field will need to undertake a three-unit bridging course. Those also with related post-graduate qualifications will only need to complete a one-unit course on FASEA Code of Ethics.
The Graduate Diploma is an eight-unit course, available at various educational institutions around the country, which will take up time and money.
Advisers have up until January 1, 2024 to complete their studies.
How will dealer groups respond and support advisers in their studies? From a business perspective, how will the dealer groups at greater risk of losing advisers due to early retirement manage their business for growth?
Here are some interesting statistics when it comes to advisers and their current qualifications.
- 48% of advisers don’t hold a degree and are expected to undertake significant study (Graduate Diploma or equivalent) before allowing for recognised prior learning.
- The proportion of advisers with AQF7+ qualification has grown marginally in the past nine months. The new education requirements will require significant additional effort by the industry to meet the 1 January 2024 deadline.
- 21% (around 5,200 advisers) of advisers hold an AQF7+ qualification but not in a related field of study. These advisers are required to undertake significant study in the form of Graduate Diploma or equivalent.
- There are around 1,000 advisers with 30+ years of experience without a degree. These advisers are required to undertake significant further study which may encourage early retirement.
- 31% (around 7,900 advisers) of advisers hold an AQF7+ qualification with a related degree will need to complete a bridging course with at least three units. Those with post grad qualification may only need to do one-unit bridging course.
Recognising that the adviser register may not have full detail in the qualification description, and that some advisers may not have provided the major of their degree, an optimistic scenario is where we assume all business and commerce degrees are related resulting in 1,500 degree qualified advisers requiring significant study rather than 5,200 advisers.
But that is an optimistic scenario.
There are around 1,000 advisers with 30+ years of experience that are required to undertake considerable further study. These advisers may exit the industry early rather than undertake meaningful study. This will have a very big impact on knowledge transfer to younger advisers, as well as client experience.
Data Source
The analysis in this article is based on April 1, 2018 ASIC Financial Advisers Register. We have performed cleansing of the ASIC data to remove any obvious inconsistencies or errors.
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John Low is Principal of Skilful Analytics, a data analytics consultancy that helps organisations unlock data-driven insights that enhances decision making. Prior to founding Skilful Analytics, John practiced for 18 years as an Actuary applying his analytical skills to life insurance product manufacturing and financial management of life insurance companies. In his free time, John enjoys spending time outdoors with his family as well as running and basketball.
