One of the key recommendations from the recent Royal Commission into the financial services industry was to raise the education standards required to become a financial adviser. Major changes were proposed and the Financial Adviser Standards and Ethics Authority (FASEA) has recently released the new requirements. As the updated standards summary explains,
“The amendment makes changes to the Corporations Act 2001 to raise the education, training and ethical standards of financial advisers by requiring relevant providers to hold a degree (or higher or equivalent) qualification, pass an exam, undertake a professional year, undertake continuous professional development and comply with a Code.”
We believe this formalisation of education standards is a great development for the industry.
It has long been part of the First Financial culture to make sure our team members have the right qualifications to offer exemplary services to our clients, but these new guidelines will help increase overall consumer trust in the financial industry in the wake of the royal commission.
As part of the new standards, all current advisers will need to undertake some additional education.
Each adviser will have their current qualifications assessed to determine what extra subjects need to be completed. Within our team, most advisers will only need to do a few additional units, known as bridging subjects. For other advisers in the industry there could be much more involved, such as returning to study to complete a full graduate diploma. Christine Bau, First Financial’s People and Development Manager, explains,
“These changes are impacting the entire industry… all advisers in any sized firm must have qualifications that meet the standards laid down by FASEA. However, we are somewhat protected from this impact as many of our staff have extensive qualifications.
We recognised that this change was coming back in 2014 and started working with Deakin University and Latrobe University to identify graduates with the necessary qualifications. So, a lot of our staff in adviser assistant and associate adviser roles came from those universities with their qualifications already in place.
They have the right education. Many of them have done their CFP Certification, which also gives them credit towards their overall qualifications. This means most of our team don’t need to do too much extra study, just some straightforward bridging subjects.
First Financial is in a really good position, but across the industry there are many businesses that haven’t been as prepared.”
Exam and Code of Ethics
In addition to further education, all advisers will undertake an exam that demonstrates practical application of their knowledge including regulatory and legal obligations, financial advice construction and applied ethical and professional reasoning.
All advisers must pass this exam by 2021 to meet the new standards. Compliance to the Code of Ethics must be demonstrated from January 2020. This addresses values such as trustworthiness, competency, honesty, fairness and diligence. Christine continues,
“When we recognised what was coming within the industry, we implemented processes early on. We have always been committed to our clients and wanted to make sure our advisers were some of the best in the industry.
We pride ourselves on having great relationships with our clients and it should be non-negotiable that we have the right technical knowledge to support the services that we offer. Whilst these changes are formalising industry expectations, we’ve already been focussed on education. For us it’s a matter of ticking some boxes and going through due processes… so we can confidently tell our clients that we meet all the criteria being set by the regulator.”
It is part of our culture to support our staff as they develop their skills and move forward in their careers.
We are committed to their continued learning with regular internal training, webinars and external professionals presenting at our monthly staff meetings.
We also assist our team with their mandatory ‘Continued Professional Learning’ hours and recognise that when an individual is empowered through education, it benefits the entire firm. Read more First Financial articles.