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With the Professional Year now mandated for every new financial planner entering the profession, we outline the main requirements and process for the Professional Year for candidates and their supervisors.
Why is the Professional Year important?
Although approved degree programs can equip financial planners with some of the technical skills and knowledge they need to provide clients with a professional standard of advice to meet their specific needs and goals, the Professional Year (PY) augments this with further study and on the job experience in a supervised environment.
While completion of the PY is a regulatory requirement for financial planners and their employers, it is designed to allow them to develop the necessary professional competence to perform their job. It also enables them to keep records that demonstrate this competence has been achieved so that they can be reviewed and validated by their supervisor, in order for the financial planner in training to be registered with ASIC by the AFS licensee as a “relevant provider”.
During their PY, planners progress from Provisional Relevant Provider to Relevant Provider. As a provisional provider, they must be supervised when giving advice to a client. As well as performing this role, the supervisor will support the individual throughout their PY, and take responsibility for reviewing and validating their progress with respect to the Policy requirements, such as desired outcomes.
The role of the Supervisor
Candidates can start their PY during the final stages of an approved degree but must complete their degree and pass the exam before starting the third quarter of the PY. They must have a suitably qualified supervisor, who is able to support them and be responsible for evaluating whether they have met their required outcomes, such as work activities and structured learning in the PY plan.
If a supervisor is satisfied with a planner’s progress in achieving outcomes each quarter and expects they can achieve outcomes in the next quarter’s plan, the licensee may approve acceleration of the planner’s program for quarter 1 or 2.
The Professional Year commitments
The PY is a significant commitment, for both the candidate and their supervisor. Under the PY Policy “The Professional Year is expected to build on education and professional qualifying programs approved by FASEA.”. PY activities that must be undertaken include significant relevant work and supervised experience (approximately 1500 hours) and structured education and training (100 hours) across a year (or full-time equivalent period).
Relevant study that meets the education and training requirements of PY can include FASEA formal bridging course units, or other options such as:
Education for the purposes of achieving a professional designation.
Education for the purposes of accreditation in specific forms of financial products relevant to licensing arrangements.
Education for the purposes of meeting more detailed requirements in specific financial advice provision (e.g., SMSF, stockbroking, aged care, etc.).
Record keeping by individuals and evidence-based assessment is a central feature of the PY and there are significant expectations and responsibilities for this requirement:
The candidate must keep and maintain accurate records of having satisfied the work and training requirements as per Work and Training (Professional Year) Standard.
The supervisor must review and validate evidence of the candidate having satisfied the work and training PY standard.
Licensees are required to keep these records for 7 years.
Professional Year outcomes and the quarterly program
The quarterly program for the PY is designed to allow financial planners to develop, and demonstrate the following key competencies –similar to the graduate outcomes from relevant approved degrees:
Technical competence – technical proficiency and the ability to ensure advice strategies are suitable for different consumer groups
Client care and practice – client centric practitioner who can advise both new clients and review existing clients
Regulatory compliance and consumer protection – legally compliant practitioner
Professionalism and Ethics – ethical professionals.
The program also requires the supervisor to review and validate the evidence of competency recorded by the planner. Ultimately, this can support the licensee’s own due-diligence and evaluation planner and the candidate’s registration as a Relevant Provider.
How to plan and prepare for the Professional Year
The aspiring financial planner sources a Licensee to mentor/supervise them in their work experience (if they don’t already work for a suitable Licensee).
The Licensee appoints a suitably qualified supervisor (a supervisor must have at least 2 years relevant experience, excluding their work and training requirement). Note that under the Policy, the supervisor “must provide supervision that actively assists the provisional relevant provider in getting the full benefit of the professional year in accordance with standard 12 of the Code of Ethics.”
Guided by the outcomes and proposed quarterly approach on page 7 of FASEA’s Work & Training Requirement (Professional Year) Policy, the aspiring financial planner and supervisor discuss/prepare a PY plan.
The aspiring financial planner and supervisor execute the plan developed in point 3 above. This will be a total of 1600 hours for the individual over the year and requires record keeping by both the individual and supervisor. The supervisor needs to assess and validate the individual’s progress. There are several licensee requirements which may be helpful for both the individual and supervisor to be generally aware of including:
The Licensee must advise retail clients who deal with a provisional relevant provider in writing that the provider is undertaking supervised work and training and of the name and contact details of the supervisor.
Licensees must ensure that the terms Provisional Financial Adviser or Provisional Financial Planner are not used by the individual doing PY until they have passed the exam and been authorised by the Licensee.
The licensee can approve the acceleration of the individual’s program in quarter 1 or 2 provided the supervisor has given favourable feedback.
Once the supervisor has reviewed and validated all evidence of the individual having met the PY standard for work and training, it would be expected that the licensee would do their own assessment of the individual’s outcomes and if satisfied register the individual with ASIC as a Relevant Provider.
Note: There are specific exit criteria the provisional relevant provider and supervisor must meet with respect to assessment. These are detailed on page 10 of FASEA’s Work & Training Requirement (Professional Year) Policy.
Once registered as a Relevant Provider, from a regulatory perspective, the individual can advise retail clients without direct or indirect supervision.
Financial planner Tim Manwaring and his supervisor Greg Cook from Eureka Whittaker Macnaught have shared their personal experience of the Professional Year in the FPA Podcast (link to be provided).