Education providers set to lose over $50m from experience pathway

The experience pathway could mean tens of millions of dollars in losses for education providers, according to government forecasts.

Minister for Financial Services, Stephen Jones, introduced the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 to the House for a second reading on 14 June. 

Schedule 2 of the bill amended the Corporations Act to deliver the government’s election commitment to better recognise the experience of existing financial advisers as equivalent to tertiary study.  It also addressed technical limitations in the current framework, relevant to both new entrants into the financial advice industry and tax agents providing a tax (financial) advice service to retail clients.

In explanatory documents, however, it acknowledged this would mean significant losses for education providers that run these courses. 

“The cost to education providers will be the lost revenue from advisers no longer taking their courses,” it said.

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“An upper estimate, assuming education providers pocket 100 per cent of their course fees, of this cost would be between $44 and $62 million […] Education providers have operating costs, so the true cost will be lower than this.

“Education providers might lose revenue, but this policy is unlikely to place a large cost on them. The existing adviser cohort was finite so this as a revenue source was time-limited, even without the election commitment.

"Additionally, the courses experienced advisers and new entrants must complete have overlap, so no upfront cost would have been spent developing courses specifically for experienced advisers.”

The financial cost of completing the maximum of eight courses at a university was $28,000 or $20,000 at a registered training organisation (RTO). If a person only needed to complete four, this fell to $14,000 at university or $10,000 at an RTO.

The cost to complete an ethics course was $3,518 at a university or $2,500 at an RTO.

“For those advisers who are eligible for the election commitment but who had begun to complete the education requirements, the benefit of the election commitment is the time and cost saving of not needing to do more education,” it said.

“However, the extent of the benefit depends on how many subjects the adviser has already completed and how many subjects are remaining. Assuming these advisers have at most four units of study to complete (from a maximum of eight), advisers would save up to $10,000 and 480 hours. 

“Advisers who have invested time and money into already meeting the education requirements may consider that a wasted expense as a result of the election commitment. However, undertaking additional education can refresh an adviser’s skills and, as the information can be recorded on the Financial Advisers Register, could be seen by consumers selecting between advisers as a plus. Indeed, an education provider has observed that advisers are continuing their studies despite the election commitment.”

For those advisers who had indicated they were not going to undertake any other study and would therefore have to leave the industry by 1 January 2026, the government said the benefit was the ability to work longer.
Approximately 2,086 advisers had indicated they were not intending to study or remain in the industry after 1 January 2026 if there was no experience pathway.

“Given the intention to leave, it could be assumed that the benefit of continuing to work in the industry was considered less than the cost (up to $20,000 and 960 hours for eight units of study). The benefit to these advisers is the remuneration they can continue to receive beyond 1 January 2026,” it said.

Unsurprisingly, the push for an experience pathway had not been supported by providers although many stated they had seen recent students who would likely be eligible to opt to study regardless as the legislation had been significantly delayed.