Is adviser experience equivalent to education?
In light of the recent experience pathway consultation, former Association of Financial Advisers (AFA) chief executive Phil Anderson has debated whether 10 years of experience can be comparable to a university degree.
Last month, the Minister for Financial Services, Stephen Jones, announced consultation on the proposed experienced pathway, which closed on 3 May. It was estimated that around 3,000 advisers could benefit from the program.
The draft legislation would deem a financial adviser to have met the education requirements if they passed the adviser exam and:
- Had 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021; and
- Had not recorded any disciplinary action on the Financial Advisers Register (FAR) before 31 December 2021.
When asked on an AFA webinar whether a decade of experience in the advice profession was equal to a university degree, Anderson was hesitant to call them equivalent.
“I don’t think they are directly comparable; education and experience are not the same thing. Education is important, but having good education doesn’t mean you’ll be a good adviser. Equally, having a lot of experience doesn’t ensure that you will be a good adviser,” he said.
The now-general manager of transformation and interim general manager of policy and advocacy at the Financial Advisers Association Australia (FAAA), formed through the merger of the AFA with the Financial Planning Association of Australia (FPA), reiterated the value of lived experience when working in the industry.
“There are things you learn from experience that you don’t necessarily get from education, such as the people skills that advisers are known for.”
Knowing how to sell advice to your clients was one of those skills that students could not receive firsthand from a university degree.
“It’s not as simple as saying 10 years of experience is equivalent to a degree, but experience is really important, and we do need to value it, which is what we are getting with the pathway,” Anderson continued.
Moreover, he debated whether ineligible advisers could potentially misuse the pathway to remain in the profession.
“I’m not particularly concerned about the clean track record because that’s an objective exercise. The Australian Securities and Investments Commission (ASIC) has a banned and disqualified register, so this will be black and white if someone meets it or not.”
Anderson made reference to Sydney-based adviser Todd Karamian, who was banned after he falsified the results of his financial adviser exam, but reassured that those types of cases would be picked up.
The potential risks lay with the 10 years of full-time equivalent experience in the 15-year period. Specifically, those who were permitted to provide advice by their licensee but weren’t authorised representatives, such as salaried advisers, were excluded from an official register.
In addition, those who may have worked part-time for a period within the last 15 years could also be a challenge.
“The assessment of whether someone meets that 10-year, full-time requirement is going to need to be done very carefully.”
Despite the obstacles, Anderson remained confident in the verification system and the Code of Ethics.
Kaplan’s chief executive, Brian Knight, had previously suggested that a way of recognising those who had completed the additional qualifications was necessary to differentiate them from advisers who had used the experience pathway.
Moreover, Anderson echoed the FAAA’s recommendations for a 10-year sunset clause to further support older advisers, along with a requirement to meet the Code of Ethics subject.
“We do realise this is a hotly debated issue. When we’ve done surveys in the past, we found that half of our members are strong supporters, and half are strongly opposed.
“We’ve sought to find a position that takes into account the arguments of both sides.”
AUTHOR
Jasmine Siljic
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The question should be reversed "Is a university degree worth 10 years' experience."
When a doctor graduate's, he can call himself/herself a doctor, however, would you consult this doctor or would you want to see some experience. I employ graduate accountants and whilst they have some knowledge, i would never let them loose on clients without having obtained the necessary experience and understanding that comes with working with a senior accountant to ensure they have a complete understanding of the rules. In our case they must complete their CPA training and we provide practical experience under supervision. This training is more important than their university degree. Both experiences together with a university degree are equally important. For the current debate experienced advisers with many years of experience are a valuable resource and our profession cannot afford to lose them.
The primary intent of the experience pathway is NOT to equate 10 years experience with a degree. It is to acknowledge that advisers with 10 years of experience will have significant higher education, including degrees in many cases, that wasn't appropriately recognised by FASEA.
It is about trying to fix some of the FASEA mess after the damage has been done, because Jane Hume refused to intervene at the time when it was clear FASEA had lost the plot.