The end for Australia’s worst financial planners?

A proposal requiring all new financial planners to have a bachelor-level degree has been given the green light.

Is it the end for Australia’s worst financial planners? An ambitious proposal, which will require all new planners to have a bachelor-level degree in financial planning, has been greenlighted by Federal Treasury after a dreadful period for the profession which has seen an unprecedented level of scandals especially at the major banks.

The new degree should kill off a notorious wing of the profession where financial adviser-style degrees are delivered by private colleges offering low-workload online qualifications based on multiple choice questions.

Under the new regime degree seekers will have to: “Sit down and do a monitored exam in a formal situation, it’s what we have been pushing for since 2011,” says Dante De Gori, CEO of the Financial Planning Association.

Top planners have been complaining loudly that current qualifications are not sufficiently rigorous or properly supervised. Typically a ‘securities adviser’ can still obtain an adviser qualification relatively easily and then work ‘under licence’ at a large organisation with the minimum of training.

Now the government’s powerful and newly minted Financial Adviser Standards and Ethics Authority has signed off an FPA proposal for reform of the industry’s educational standards that will mandate the degree, which is made up of 24 courses (12 of which will be core) by January 2019. From that date nobody will be able to call themselves a financial planner or adviser unless they hold the degree.

Existing planners among the 20,000 or so professionals currently active in the industry can apply for a degree equivalent. “We’re hoping every adviser in the industry will get up to speed, but we must wait and see,” says De Gori.

Getting the new courses underway at more than a dozen universities around the country will be among the first projects overseen by Deen Sanders, the first CEO at FASEA.

The FPA has about half of the advisers acting in Australia among its members — it already manages the premium grade global advisory qualification the Certified Financial Planner degree, which is held by around 5,500 advisers in the local market

The new initiatives from Treasury have been launched through a high-profile board chaired by well-known company director Catherine Walter, who has been flanked on the board by Matthew Rowe, the CEO of Countplus, insurance executive Steve Somogyi and Simon Longstaff of the St James Ethics Centre.

FASEA is only up and running since June this year, when it was created as the new standards body to “set the education, training and ethical standards of financial advisers who provide personal advice on relevant financial products to retail clients”.