Since 1 January 2019, it is a requirement of the Corporations Act 2001 that a person training to become a financial adviser undertakes minimum work and training requirements – also known as a professional year – before they can be registered as a financial adviser.
The professional year is a minimum of one year full-time equivalent, comprising 1600 hours, of which at least 100 hours is to be structured training.
The professional year requirements are split into quarters so that a person can transition from a directly supervised approach to an indirectly supervised approach:
- Quarter 1 – Client Observations and support to Supervisor/Experienced Adviser
- Quarter 2 – Supervised Client Engagement and Advice Preparation
- Quarter 3 and 4 – Indirect Supervision of Client Engagement and Advice Preparation.
New entrants will engage with their supervisor and Australian Financial Services (AFS) licensee to establish a professional year plan. The Corporations (Work and Training Professional Year Standard) Determination 2018 sets out the extensive range of requirements that apply to the professional year, including the requirements for supervisors and AFS licensees. While the Financial Adviser Standards and Ethics Authority has been wound-up, the standards it made are still in effect until the Minister amends or remakes the standards.
A person can start their professional year whilst they are in the final stages of completing their approved degree. However, before commencing the third quarter of their professional year they must:
- have completed an approved degree or equivalent qualification,
- have passed the financial adviser exam, and
- be authorised by their AFS Licensee as a 'provisional relevant provider' on the Financial Advisers Register.
Structured training
The professional year standard requires the completion of 100 hours of structured training during the professional year.
Structured training may include formal study that is undertaken during the professional year for instance if completing the Ethics for Professional Advisers bridging course. Other relevant study options might include:
- 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).
Structured training should be made up of education that is measurable, assessed and leads to further qualification (formal and informal) outcomes for participants.
Acceleration in the professional year
An AFS Licensee may approve the acceleration of an individual undertaking quarter one or quarter two of the professional year if the supervisor is satisfied that the person:
- has achieved the outcomes set out in the professional year plan for that quarter; and
- is capable of satisfactorily completing the work activities and structured training for the next quarter.
Quarter three and quarter four are not able to be accelerated. Even with an accelerated pathway, the full 1600 hours of work and training over a 12-month period are required to complete the professional year.
Accelerating quarter one or quarter two, may allow a person training to become a financial adviser to sit the exam earlier than otherwise would be the case. If successful they may then be able to progress to the status of provisional relevant provider earlier (subject to meeting all other requirements and licensee approval).
Record keeping
Licensees can determine how record keeping of professional year is maintained, including developing templates and systems if required.