Throughout April and May, the FPA surveyed members in relation to FASEA’s proposed requirements. The following is an executive summary by CoreData of the results from 3,393 members, which helped shaped the FPA’s submission to FASEA.

FPA members are highly educated

The most common form of education for financial planners is a Diploma of Financial Planning, held by 74.0 per cent of all FPA members, and 60.2 per cent of all members hold the 8 Unit Diploma of Financial Planning.

Nearly one-third (32.3 per cent) of FPA members hold an 8 Unit DFP in addition to an undergraduate or graduate degree (unrelated or related).

Considering only related undergraduate and graduate degrees, over one-fifth of planners (22.0 per cent) hold a related degree as well as an 8 Unit DFP. A majority of FPA members (64.0 per cent) hold an undergraduate or post-graduate university degree.

To educate themselves further in areas that require supplementary education, many planners have chosen to study additional coursework, with 59.7 per cent of FPA members holding and maintaining the internationally recognised CFP® designation. Another common form of continued education is the SMSF Specialisation, held by nearly half (49.3 per cent) of FPA members. The third most common concentration is the Aged Care Specialist Standard, held by 24.2 per cent of all members.

Furthermore, 80.2 per cent of FPA members are registered with the Tax Practitioners Board, enabling them to act as Tax (Financial) Advisers or Tax Agents in Australia.

FPA members are highly experienced

The majority of FPA members (66.4 per cent) have been planners for more than 11 years. The most frequently occurring length of time a member has been practising is 20 or more years (28.2 per cent), with the average time being 15.5 years. A trend in the data is that with experience, comes CFP^® certification – 39.2 per cent of all CFP^® practitioners have over 20 years of experience.

Those most experienced will need to do the most

The FPA survey revealed that planners who have been practising for long periods of time have very low levels of proposed FASEA approved qualifications. This is especially true for segments comprising 16-20 years of experience and 20+ years of experience.

These groups pass Financial Planning Education Council (FPEC)/Financial Adviser Standards and Ethics Authority (FASEA) proposals at a rate of just 12.4 per cent and 6.0 per cent respectively. Planners with 16+ years of experience make up 48.4 per cent of the FPA membership.

Consequently, the most experienced are likely to leave

The research found that most planners (58.3 per cent) with 20 or more years of experience have a formal university education. A large majority (71.9 per cent) of all planners with 20 or more years of experience hold an 8 Unit Diploma of Financial Planning.

In fact, planners with 20 years or more experience have the highest proportion of CFP^® certification, when compared with all groups, at 83.1 per cent.

The 20+ years segment also makes up nearly half (41.9 per cent) of all practice owners, and when including the 16+ years segment, they make up 67.6 per cent of practice owners.

Unfortunately, this group is extremely vulnerable to FASEA proposals and is the most likely to act negatively.

Reforms will affect planners and practice owners equally. Regrettably, 68.4 per cent of all 20+ year veterans say they will retire or move on because of FASEA. This figure drops to 46.2 per cent when considering the 16-20 year band.

Bearing in mind the importance of business owners as mentor figures and providers of employment, overall, nearly half (48.8 per cent) of owners say they will sell their business (25.7 per cent) or implement a succession plan (23.2 per cent). This represents a significant hit to employing businesses in the financial planning sector.

When focusing just on financial planners with over 20 years of experience (who represent 41.9 per cent of all businesses), 71.4 per cent of these planners will sell up or implement a succession plan for their planning practice. This represents a big loss of experienced leaders of financial planning businesses across the country.

Don’t cover old ground, let’s grow

The FPA survey clearly shows that planners appreciate the need for a universal standard to help make financial planning a profession that is respected and trusted, and many agree there is a need to raise standards of financial advice education.

However, many believe very strongly that the FASEA proposals are simply a re-hashing, box-ticking exercise. These planners believe that completing a bridging course or additional approved courses will not have the desired effect.

Planners generally see the bar set by FASEA as being unfair and arbitrary. There is a strong sentiment that 95 per cent of planners have been thrown in with 5 per cent of the ‘cowboys’.

Instead of repeating coursework, financial planners have consistently shown they have a desire to continue professional development and to specialise further through tertiary studies.

Committed to professional growth

The majority of FPA members complete annual FPA required CPD hours through online learning and events. Over one-fifth (20.7 per cent) of FPA members are currently developing their skills by studying further education, such as SMSF Specialisation and/or Aged Care Specialist Accreditation or additional university studies.

The most common form of further education is the CFP^® designation, which 41.5 per cent of current students are taking. The CFP^® designation, as a form of further education, is nearly twice as popular as FPEC/FASEA approved degrees, which only 21 per cent of all students are pursuing.

The CFP^® certification is very popular with less experienced planners; 60.6 per cent of planners with 0-5 years of experience are currently working towards the CFP^® designation.

Planners are confused and require clarity

FPA members feel very uninformed in their path forwards towards 2024, with many planners waiting on degree accreditation from FASEA. These planners want a simple answer. A common frustration is that their degree will not be acceptable. An even more common frustration is the lack of clarity, and reasons as to why some degrees are accepted, and some are not.

CFP^® designation raises professional standards

Those planners who hold the CFP^® designation strongly believe that the FPA and the CFP^® mark both have merit and accountability. The CFP^® mark has been attributed as the highest financial planning designation in the world and is recognised in 27 nations.

Independent research (CoreData) has found the CFP^® designation as a badge of trust for Australian consumers seeking financial advice, and a credential that is relied on for finding and recognising quality advice.

CoreData has found that FPA members who hold this designation feel that the requirements to gain CFP^® certification, as well as the CPD, sufficiently fulfils the necessary prerequisites to achieve professionalism.

Methodology

The FPA surveyed 3,393 Australian FPA members in April 2018. Random sampling, along with the very large sample size, ensures responses are representative of FPA membership Australia-wide. The responses accurately describe the current sentiment and intention of planners regarding the FASEA proposals.

Striving to measure how the proposed FASEA standards will affect FPA members, results are interpreted through various demographic segments – revealing how intention and sentiment are dependent on member characteristics.

The survey results were analysed and compiled into an executive summary by CoreData Australia in June 2018 for
the FPA.

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FPA submission to FASEA proposals

The FPA has listened to members concerning FASEA’s proposed new requirements, with member feedback featuring in the FPA’s submission to FASEA.

With 3,393 FPA members responding over April and May to the FPA’s survey on FASEA’s new guidance on proposed education standards and code of ethics for planners, FPA policy manager, Heather McEvoy wasn’t surprised at the feedback from members.

“As the FPA had already widely consulted with members regarding FASEA’s proposed standards, we weren’t too surprised by the results from members,” McEvoy said. “However, the survey findings provide vital evidence to support the FPA’s submission on these proposals to FASEA.”

McEvoy identified five key areas in the FPA’s submission. They include:

Education pathways

Under the legislation, FASEA can recognise prior learning, but has instead passed this over to each university to determine. By doing so, FASEA is ignoring quality past education that is specific to the provision
of financial advice.

“The proposals set out by FASEA are quite complicated and don’t acknowledge the quality of past education done by planners. These are transition requirements for existing planners and we believe that all past education should be recognised, particularly advice specific education.

“The FPA has always supported raising the minimum standard of education, with an approved degree or graduate diploma being a requirement of all new planners,” McEvoy said.

“However, it would seem that FASEA is proposing to take a complicated and higher level approach to education for existing planners.

“This will ultimately hurt consumers in the end by adding to the cost of advice, and forcing experienced and
highly educated planners either back to the classroom or out of the profession altogether. We believe this
is entirely unreasonable.”

CFP^® designation

In its submission, the FPA argues strongly that prior and continuing learning through the internationally recognised CFP^® Certification Program, be recognised by FASEA as part of its education pathways.

“The CFP^® designation is very specific to financial planning advice and delivered at the very highest level. We argue that FASEA needs to consider study undertaken to attain the CFP^® designation, as part of its overall education pathways,” said McEvoy.

“The work and commitment required to hold the CFP^® designation is also reflective of the Government’s package of reforms that include: education, examination, continuing professional development and code of ethics.”

Implementation costs

The FPA believes the FASEA proposals are currently quite costly to implement. FASEA will be required to either assess or audit approximately 25,500 individual planner transcripts/records or outsource this to a third-party.

“It’s highly likely this cost will be passed on to either planners or their licensee,” McEvoy said. “That will only add to the cost of advice for consumers.”

CPD

Under the FASEA proposals, there is a requirement that all planners undertake regular CPD. This has long been an FPA standard. As such, the FPA doesn’t expect the FASEA CPD requirement to be materially different to practitioner members’ existing obligations.

Code of Ethics

All planners will be subject to a Code of Ethics from FASEA. The FPA already has a very strong and enforceable Code of Ethics that members must adhere to.

“It must be remembered that the FASEA proposals are part of a package of reforms that include: education, examination, continuing professional development and code of ethics,” McEvoy said.

“The FPA will continue to campaign strongly on behalf of all members and their clients to ensure FASEA adopts a commonsense approach to its proposals.”