Academic journal article Financial Services Review

The Financial Planning Education and Training Agenda in Australia

Academic journal article Financial Services Review

The Financial Planning Education and Training Agenda in Australia

Article excerpt


Against a backdrop of financial services reform and uncertain economic times, attention has been focused on the competence of financial advisers. This paper examines the current training and education standards set by the Australian Securities and Investments Commission and those set by professional bodies such as the Financial Planning Association of Australia. It provides a comparison of the state of regulation of financial planners in the United States with the recent report released by the Government Accountability Office (GAO). The paper suggests that minimum training standards set by the Australian regulator have allowed private education providers to capture the training and education agenda away from the profession with the result that financial planning in Australia may not yet be a profession, but simply an industry. © 2011 Academy of Financial Services. All rights reserved.

JEL classification: D14; G20; I23; I28

Keywords: Personal financial planning; Regulation; Australian universities; Education and training; Private providers

1. Introduction

Financial planning is a relatively new profession in Australia and relatively new to academia (Cull, 2009), with little research interest and activity from universities. Australian universities have not yet embraced financial planning as a discipline worthy of research (Matchett, 2009). There have been relatively few research higher degrees awarded in financial planning in Australian universities and many of these have been classified under die 'finance' or 'accounting' areas.

Since the promulgation of the Financial Services Reform Act (2001) and subsequent release of Policy Statement 146, now known as 'Regulatory Guide 146: Licensing: training of financial product advisers' (RG 146), by the AustraUan Securities and Investments Commission (ASIC), little research has been done on the training and education courses that have resulted from this reform. Cowen, Blair, and Taylor (2006) provided an analysis of all dedicated financial planning courses available at universities in Australia. The most important finding of this study was that of the 38 publicly funded universities in Australia, only 12 offered dedicated financial planning courses. Only one of those 12 was from the established 'Group of Eight' universities (Cowen et al., 2006).

This paper does not attempt to assess the quality of training and education offered by private providers compared with universities, but rather to point out that most financial advisers are receiving their training via private providers. Further, that this is the case because the regulator has set minimum training requirements that are delivered in the vocational education and training sector, where private providers are most prevalent. This paper argues that the lack of higher education qualifications among the trained financial adviser workforce does not help develop the profession. Paradoxically, it was reported (Matchett, 2009) that many of the staff of the failed Australian Financial Services Licensee Storm Financial Planning had masters degrees.

This paper will provide analysis of the Australian regulator's training register to argue that the regulation of training and education standards for financial advisers in AustraUa has allowed private providers to capture the training and education agenda.

2. Regulation of training for financial advisers in Australia

Under Australian Corporation Law, any business or person that offers or advises about financial products must be an Australian Financial Services (AFS) license holder, a director or employee of a AFS license holder, or an Authorised Representative of an AFS license holder (ASIC, 2010). AFS Authorised Representatives may be individuals or businesses. All individuals who provide financial product advice to retail clients must meet the training standards subject to certain timited exemptions (ASIC, 2008). …

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