Government to improve ‘unsustainable’ advice qualification requirements

The government has announced it will reform the education standards for financial advisers by opening up the number of approved degrees that students can undertake.

Building on the Delivering Better Financial Outcomes (DBFO) reforms, the changes aim to address the shortage of advisers in Australia and help new advisers enter the profession with greater ease.

“The government will streamline the qualification requirements to expand the pipeline of new entrants to the profession. The current standard is unsustainable. It is unattractive to school leavers due to the restrictive career path and it requires a significant investment in study for career changers,” the announcement stated.

In particular, the government will remove the requirement for individuals to complete an approved qualification offered by only a limited number of higher education providers.

The new education standard will centre around the requirement to hold a bachelor’s degree or higher in any discipline, it explained, recognising the important role of tertiary education across all disciplines.

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Moreover, incoming advisers will need to meet minimum study requirements in areas including finance, economics or accounting, alongside prescribed accredited financial advice subjects covering ethics, legal and regulatory obligations, consumer behaviour, and the financial advice process.

Existing professional standards – undertaking the Professional Year (PY) program, passing the adviser exam, and completing ongoing professional education – will still remain, the government confirmed.

“The new standard is more sustainable than the current prescriptive pathways. For most students studying a commerce, economics or finance degree, the cost and time to meet the requirements under the new standard will be halved.

“The new standard will upskill the next generation of financial advisers quicker as employers can tailor the combination of structured learning and on-the-job training for each individual. This will attract new talented professionals with diverse backgrounds to explore financial advice as a career.”

Existing advisers are still required to meet the 1 January 2026 deadline of having an approved bachelor’s degree or above or equivalent.

The government will work with industry and higher education providers to ensure an appropriate transition to the new education standard, it continued.

These reforms will also complement the education requirements for the new class of financial advisers (NCAs), as seen in the DBFO reforms, to create a cohesive transition into professional advice.

Industry reaction

Reacting to the news, the Financial Advice Association Australia (FAAA) CEO, Sarah Abood, told Money Management: “We welcome the minister’s recognition that changes to the education standard are due. Along with our Joint Association Working Group (JAWG) partners, the FAAA took a range of proposals to Treasury and the minister last year, and we are pleased that these have been heard.

“It is critical to the future of the profession that more people choose a career in financial advice and, as part of this, it needs to be easier for commerce, economics and finance students from all universities to become financial advisers.”

However, Abood expressed concerns that the changes could adversely impact the existing universities offering financial advice education. She said it will be critical to confirm that existing financial planning courses will remain approved going forward, and that existing programs remain an important pathway for new entrants to join the profession.

The CEO continued: “We note that important detail is yet to be communicated, including the timing, arrangements for current students, and any impact on those existing financial advisers who are striving to meet the education standard by the deadline of 1 January 2026.

“Noting that a federal election must be held by May this year, and assuming that no changes will be legislated before then, we will work with the government post-election to make sure that changes will support the growth of professional financial advice, for our members and consumers.”

Abood referenced the FAAA’s recent pre-budget submission, which proposed a package that would deliver a payment of $10,000 to firms hosting a PY candidate and subsidise the current $1,500 per-candidate exam fee in a bid to encourage greater growth in new entrants.

The Financial Services Council (FSC) and the Stockbrokers and Investment Advisers Association (SIAA) also welcomed the government’s reforms, with both groups noting the restrictive nature of current educational requirements.

FSC chief executive, Blake Briggs, remarked: “The current education standards are unnecessarily restrictive, creating barriers for both aspiring advisers and existing professionals trying to meet the requirements. These rigid standards have contributed to a critical shortage of financial advisers, with new entrants to the profession declining from almost 5,000 in 2018 to just over 500 in 2024.”

Briggs added that these issues have been further exacerbated by several universities withdrawing their financial planning courses and bridging units in recent years due to low demand.

Similarly, SIAA’s chief executive, Judith Fox, explained that the current framework has “locked out” new graduates and professional mid-career changers with suitable degrees who are currently considered unqualified.

“Having highly suitable degrees in finance, commerce, business and economics from Australia’s top universities dismissed under the current framework has seen those wishing to work in investment advice turn away from their chosen profession,” she commented.

As a result of the incoming changes, Fox said: “Our sector will once again be able to attract the best and brightest from the top universities. The profession will be able to offer a high degree of quality in the advice role.”