Almost 20% of financial advisers in Australia are threatening to quit the industry if the regulator goes ahead with new rules that will force them to undertake additional postgraduate study.
According to a survey conducted by the industry body in support of its submission to the Financial Adviser Standards and Ethics Authority (FASEA), 18.6% of FINSIA members intend to leave the industry if existing qualifications are not recognised, while a further 34.7% remain unsure.
Advisers with more than 21 years’ experience are more inclined to exit the industry, with 26.3% saying they will likely do so when the new requirements come into force.
Among those surveyed, FINSIA said there was considerable confusion about whether their qualifications would be accepted by FASEA.
Most financial advisers with over 21 years of experience have completed academic qualifications through the Securities Institute of Australia prior to 1998, which the regulator might not recognise.
57.8% of its existing adviser members in the country currently hold qualifications that are AQF 8 and AQF 9 level. This is higher than the minimum AQF 7 level required under the draft guidelines.
In a bid to strengthen the industry with better qualified professionals, FASEA plans to introduce mandatory exams in the sector.
The exam will test advisers’ competency in elements of behavioural finance such as client and consumer behaviour, engagement and decision-making (10%), as well as applied ethical and professional reasoning and communication (25%).
The final component will look at financial advice construction and the suitability of advice aligned to different consumer groups (20%).
If an adviser fails their first attempt at the exam, they will be able to re-sit the test twice thereafter, with different questions to be answered each time. Completion of the exam would take between three and four hours.
The new education standards for the industry will have to be met by the start of 2024.