Is the experience pathway overcomplicating advice?
Distinctions between “experienced” and “relevant” advice providers could lead to further confusion, according to The Advisers Association’s (TAA) chief executive, Neil Macdonald.
Following the Treasury’s closed consultation on the proposed Experienced Adviser Pathway on 3 May, TAA’s chief executive cautioned about the potential impact it could have on those seeking advice.
While an experience pathway was necessary to meet consumer demand, Macdonald questioned whether it caused overcomplication.
“If we stand on the outside for a moment and look in, consumers must be wondering what is so difficult,” he said.
“We think using terms like ‘experienced provider’ and ‘relevant provider’ just creates deeper consumer confusion. The differences between these two providers are not immediately clear and will have to be explained.”
Moreover, Macdonald highlighted the risk that consumers could view “experienced” providers as better than “relevant” providers.
Sarah Abood, chief executive of the newly formed Financial Advice Association of Australia (FAAA), had previously suggested that distinctions between “experienced” and “relevant” providers not be made on the FAR for the same reasons.
Consumer confusion around an adviser’s education requirements could also grow from a lack of clarity, such as why prior learning was not better recognised.
“We’re sure many consumers still don’t know what qualifications financial advisers must hold, and if they do, they are likely scratching their heads as to why there has so far been such a one-size-fits-all approach to adviser education,” Macdonald said.
TAA suggested that the same naming conventions be used in law for all advisers, and the difference between experienced and relevant providers could be defined on the consumer level.
The chief executive flagged that new entrants being given flexibility regarding training standards when experienced advisers were not made little sense.
“We’re trying to grow a profession here, so these anomalies are counter-intuitive.”
Additionally, TAA was wary that the different months and years being applied to 10-year experience pathways would create unnecessary risks and confusion for both the Treasury and the advice industry.
“This level of complexity might be all well and good if it provided substantial additional consumer protection, but in our opinion, it does not, and once again, it will need to be explained to consumers, creating yet another education exercise,” he said.
The association recommended the period for the 10-year experience should align with current education standards, ending on either 31 December 2025, or before 1 January 2026, echoing the FAAA’s recommendation for a sunset clause.
AUTHOR
Jasmine Siljic
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I keep repeating myself but, before we continue down this path that advisers need a degree to be considered professional or members of a profession must be all degree holders to qualify regardless of years of experience before degrees offerings were already in place: I would like somebody to put up here in the comments, just one(1) shred of evidence that to be a professional, coming out of a past of occupational experience, practicing before educations requirements required a new entrant to hold a degree, what shred of empirical evidence can you demonstrate that any profession has required this of their historically competent members before any laws were enacted, requiring new entrants to hold degrees.