Financial Planning Association of Australia Head of Policy and Standards Ben Marshan says many advisers have been surprised. “It’s a lot better than what they’d been expecting. You just need to spend a bit of time figuring out how it affects you and what your pathway is,” he says.
Marshan cautions advisers to check the latest requirements on the Financial Adviser Standards and Ethics Authority (FASEA) website to avoid the misinformation that’s around, based on early drafts.
There are five elements that financial advisers need to comply with:
Existing advisers are required to pass the 3.5-hour Financial Adviser Exam before 1 January 2022. The exam tests advisers’ knowledge of various regulatory and legal requirements; financial advice construction; and ethical and professional reasoning and communication.
The exam consists of multiple choice and written responses and is ‘open book’ for statutory materials. Advisers can study for the exam using FASEA’s preparation guide a candidate video, and by completing practice questions. The latest information about the exam can be found on the FASEA website.
The exam is being held in cities and regional centres around Australia with details announced by FASEA several months in advance.
Advisers pay an administration fee of $540 plus GST each time they sit the exam. Those who fail may re-sit any number of times but there’s a three-month waiting period between exams. In practise, Marshan says those who fail will probably have to wait six months because it takes some time for the exam results to be released.
Exam preparation is definitely necessary but it’s not as difficult as some fear, says Marshan.
“You’ve got to put in a couple of weeks of preparation and reading. You can’t just do a weekend of reading and hope for the best.”
Code of ethics
All advisers must comply with the Code of Ethics from 1 January 2020. The Code consists of 12 standards of ethical behaviour, client care, quality process and professional commitment.
Under the Code, advisers must also act with fairness, trustworthiness, competence, diligence and honesty.
FASEA has released further information to help advisers comply with the Code, explaining some of the principles and standards using case studies.
While all new advisers entering the industry must first complete a FASEA-approved degree or diploma, existing advisers have until 1 January 2026 to meet the education requirement.
Advisers already holding a degree in a related discipline, such as accounting, banking, economics or some areas of law, may receive credits towards the education standard and will only need to complete a bridging course of four subjects.
Cost varies greatly depending on how many units of study must be completed. Depending on the college or university, each unit can cost anywhere from AU$1,200 to almost $4,000.
Advisers with no degrees but with experience and some education can take advantage of the recognition of prior learning offered by FASEA.
Marshan says despite the concern about onerous education requirements, most experienced planners need to do less study than they may have thought.
“For example, over 50 per cent of FPA members only need to do one subject. Only about five per cent of our members will have to do all eight units,” he says.
Advisers can choose from many different types of study options to complete the education requirement from traditional university courses over 14-week semesters, to four-day intensive courses to complete one unit. Distance learning is also available.
A professional year
All new advisers must now complete a year of mentoring and coaching in addition to their education requirements before they’re qualified to provide personal advice to retail clients.
Known as a ‘professional year’, it’s 1600 hours, of which 100 hours is structured training.
Marshan says licensees hire a graduate and put them through the program.
“Licensees are saying to us they’re very keen to bring people on, they’re keen to get good professional year programs up and running,” he says.
Continuing professional development
From the beginning of 2019, all advisers must complete 40 hours of continuing professional development (CPD) each year.
That means participating in training programs and activities to maintain and extend professional capabilities, knowledge and skills and keeping up to date with regulatory and technical developments.
It can be as cheap or expensive as you want to make it, says Marshan.
“You can spend a lot doing your CPD if you want to attend training courses, or there are ways you can get through it close enough to free,” he says.
Challenging times will pay off
Advisers need to be prepared for a challenging few years ahead but there’s a light at the end of the tunnel, says Marshan.
“There’s a lot of business transformation they’ll need to do off the back of the Royal Commission recommendations and the life insurance framework. Then they’ve got to do study on top of that through FASEA,” he says.
“But when we get through this next five-year period, there’s going to be a fantastic profession on the other side of that.
“Consumer trust will be significantly raised, and I think things will look pretty good for the profession of financial planning.”
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