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The rapidly changing financial advice world – an educator’s perspective

Kaplan Professional CEO Brian Knight shares six themes that are shaping the rapidly changing financial advice world from the perspective of the industry’s leading education provider.

Kaplan Professional CEO Brian Knight shares six themes that are shaping the rapidly changing financial advice world from the perspective of the industry’s leading education provider.

The next six months

The most pressing issue facing the industry in the immediate future is the looming deadline of FASEA’s Financial Adviser Examination. The Federal Government recently announced they would grant an extension until September 2022 for advisers who had failed the FASEA exam twice.

Kaplan Professional welcomes any initiative that will provide assistance and support to advisers, especially those who genuinely wish to stay in the industry, and we remain committed to supporting all advisers to pass the FASEA exam.

FASEA has recently announced advisers will have the option to sit in November 2021 irrespective of the timing of their last sitting, so advisers will have two opportunities to sit the FASEA exam before the end of the year (either July and November sittings or September and November sittings). We know there are approximately 1,200 advisers who’ve sat the FASEA exam once and will need to sit again to qualify for the extension. There’s also some uncertainty around when the Bill will be passed in parliament. This means advisers should try and pass the FASEA exam in one of the remaining sittings this year and not solely rely on the extension.

With a number of advisers who still need to pass the FASEA exam, it’s more important than ever these advisers are encouraged to focus on their exam preparation as a matter of priority. We understand there are a number of advisers who are apprehensive about sitting a lengthy exam or have failed and may be struggling with some self-doubt.

If you’re one of these advisers, I urge you to reach out and speak to an education provider like Kaplan Professional because we can support you with authentic and comprehensive exam preparation resources to build your confidence.

We’ve had over 8,000 advisers complete at least one of three versions of our purpose-built Kaplan Adviser Practice Exam (KAPE), which is designed to simulate the conditions, duration and structure of the FASEA exam. 3,000 of these advisers have taken up the complimentary enrolment in KAPE that we’ve offered since January 2021, which has now been extended until at least 30 September 2021. In addition to KAPE, we also offer complimentary monthly exam preparation webinars, and bespoke corporate workshops and one-on-one tutoring at minimal cost.

While we understand there are advisers who are adamant they don’t want to sit the FASEA exam because they’re going to exit the industry before the end of the year, we believe there’s one major incentive to have an attempt at passing the FASEA exam. This will extend an adviser’s timeframe until at least 1 January 2026, meaning they’ll have more time to carefully consider what they want to do going forward, completing ongoing study or thinking through succession strategies. It’s vital advisers are in the best position they can be to make considered decisions about their future plans.

What happens after 31 December 2021?

We feel there’s still a lot of uncertainty around what it means for existing financial advisers who’ve not passed the FASEA exam by 31 December 2021 and don’t qualify for the September 2022 exemption. Once we reach this date, it may be difficult to ascertain which advisers are ceased on the Financial Adviser Register (FAR) because they’re on a ‘career break’, or if they’re ceased because they didn’t pass the FASEA exam. This is because when an adviser is ‘ceased’ on the FAR, there’s no explanation for this status. We anticipate this may impact a number of education pathways and the licensee will ultimately be responsible for managing this process. The scenarios include:

  1. If an adviser is on a genuine career break, they would complete the standard education requirements and be eligible for FASEA-approved recognition of prior learning (RPL) and complete the exam before reauthorisation
  2. If an adviser was ceased because they hadn’t met the exam requirement, they must restart as a new entrant. This means they must complete the Professional Year and hold an approved degree, while not being eligible for FASEA-approved RPL

Another perception is if an adviser doesn’t pass the FASEA exam before the deadline, they may have the opportunity to stay in the industry as a business owner. We feel anyone considering this should err on the side of caution. Although it may seem reasonable in theory that a business owner would be responsible for the advice provided by employees, they wouldn’t be responsible for advice under the FASEA requirements. A business owner providing guidance to a junior adviser where neither parties have fully met the FASEA requirements would be an area of concern.

Is 1 January 2026 a false sense of security?

Kaplan Professional is continuing to see strong engagement in our FASEA-approved postgraduate financial planning qualifications and bridging courses. Over 2,000 advisers are enrolled in every one of our six annual intakes, and we’re doing everything we can to support them with initiatives ranging from holding our subject enrolment fees firm, scholarship schemes, and a number of support measures to ease the burden of studying at the postgraduate level.

While 1 January 2026 may seem like quite a while away, what must be remembered is many advisers have to complete a graduate diploma, which encompasses eight subjects at the postgraduate level. Many others have five or six subjects to do. Our statistics indicate advisers working full-time take approximately three years to complete a graduate diploma with a moderate study workload.

It’s in advisers’ best interests to make this workload as manageable as they can. The earlier they get started, the more flexibility they have to balance their study with other business and life priorities. It also provides them more control over their pathway – they can adapt their study to suit their schedule and spread it out over a longer period. Work and family pressures are factors that will always need to be considered. What happens if something arises and an adviser doesn’t have the capacity to study for a significant amount of time? Advisers shouldn’t want the weight of the education requirements hanging over them until 2025, which can feel like a false sense of security.

Our support teams are continuing to map out education pathways for advisers. Those with eight subjects only have to complete two subjects per year at a moderate pace and finish with a year to spare, if they start their studies this year.

It’s our opinion that advisers who meet the education standard sooner, will be better positioned to capitalise on the predicted economic upswing in a post-COVID environment, while being able to make the most of opportunities afforded by increased demand for financial advice.

Attracting the best new talent

One obvious area of concern is the 10:1 ratio for advisers leaving the industry in comparison to those entering. Every obstacle can be overcome, so we believe the government, licensees, industry associations and education providers should embrace the following themes together:

  • Better curriculum and different education programs for new entrants, which are strictly focused on financial planning
  • Recruit and train differently to provide new entrants with a more insightful and rewarding experience
  • Think about the changing perceptions of a typical adviser – what does the consumer of the future want?
  • How do we position financial advice as an attractive proposition to school leavers and career changers – what’s the competitive advantage we can offer that no other industry can provide?

At Kaplan Professional’s end, we’re working together with licensees and industry associations on an education model that we believe will result in more equipped, experienced and qualified graduates to better meet the needs of both licensees and the Australian consumer. We look forward to releasing more information in the coming months.

Compliance with the Code

It seems there may be another consultation or amendment to the FASEA Code of Ethics in the second-half of 2021. While the Federal Government will eventually be responsible for administering the Code, licensees have an obligation to ensure their advisers are compliant with the Code. This raises some areas for further clarification:

  • How will licensees monitor compliance with the Code?
  • Who will licensees report breaches to?
  • Do licensees have current infrastructure to assist with recording non-compliance?
  • Where does accountability lie?
  • What information is disclosed to the public?

To better support licensees and their advisers’ understanding and application of the Code, Kaplan Professional is working with behavioural scientists from the world-renowned Kaplan Performance Academy in the United Kingdom on a diagnostic solution built around the FASEA Code of Ethics. Based on the outcome of a diagnostic, advisers will receive a tailored learning journey of specified micro-learning pieces.

The importance of continuing education

Perhaps overlooked in comparison to other standards, continuing education will remain a key and ongoing component of the FASEA requirements. Once every adviser has passed the FASEA exam and met the education standard, continuing education will be seen as a differentiator because it will be a way for advisers to continually enhance their knowledge and skills in emerging and specialist areas throughout their career. This is why it’s important that continuing education is recognised as a much broader concept than just a ‘compliance tick’, so a commitment to lifelong learning must be encouraged throughout the industry.

It’s important to remember that an adviser’s professional development plan must identify areas for improvement in, and development and extension of their competence, knowledge and skills. As licensees are responsible for approving their advisers’ professional development plans, it’s imperative there’s a clear understanding of what constitutes a ‘qualifying CPD activity’. With so much CPD offered across the market, often industry association approval doesn’t necessarily equal FASEA approval. Licensees and advisers must also be wary the CPD they’re completing isn’t just professional and technical reading because of the maximum four-hour cap that applies to that component of FASEA’s 40-hour requirement.

Kaplan Professional has invested significantly in our new Ontrack platform to ensure we’re able to provide licensees and advisers with a continuing education experience that embeds and reinforces the fundamental concept of lifelong learning.

We’ve aimed to leverage the latest innovations in educational methodology and learning technology to set the benchmark higher for continuing education in the industry. Every piece of Ontrack’s content satisfies and goes beyond all of FASEA’s ‘qualifying CPD activities’. With completions and engagement in our Ontrack digital modules at an all-time high, Kaplan Professional is exploring the potential of digital badges and micro-credentials to provide advisers with formal recognition for completing continuing education in specialist areas.

Kaplan Professional looks forward to continuing to collaboratively work with all industry stakeholders to ensure we’re able to find innovative and future-focused solutions that champion a positive and long-term future for trusted financial advice.


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