In its response to a consultation, Safaa said its members were concerned about education pathways being proposed by the Financial Adviser Standards and Ethics Authority (Fasea).
In March, Fasea released its proposed education ‘pathways’, which look to impose degree-level education standards on existing and future advisers.
If existing advisers do not meet these standards, they may be required to enrol in higher-education courses and sit bridging exams.
Safaa has 31 principal members, with 29 being market participants and two being non-market participants.
In its submission, Safaa said its market participants forecast that there will be an exodus of older, experienced advisers if the current pathways are enforced by Fasea, particularly for those members who are aged 50 or older.
“The number of exiting advisers without a degree is approximately 30% across our sector of the industry, and we understand that it is the same for the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA).
“There are approximately 3,000 advisers employed by market participants in Australia,” the Safaa statement said.
Creating an advice gap
It goes on to further say that if there is an exodus of 30%, clients will have no choice but to receive advice from relatively inexperienced, young advisers, albeit with a degree.
“The quality of advice will necessarily fall as tertiary study alone should not be considered a substitute for experience.
“With an exodus of older, experienced advisers, there will be a shortage of experienced mentors to provide guidance for new advisers,” the statement says.
A more ‘practical’ approach
Safaa makes several proposals in its submission to address the potential adviser exodus.
One is to allow advisers with more than 10 years’ experience to complete a four unit graduate certificate as a sufficient qualification, rather than the need to obtain a degree.
Further, it says the pathways should provide a more practical pathway for older advisers to leave the industry by “extending the sunset period”.