If you are offering advice that could influence a client's decision to purchase a financial product, you must meet both initial minimum and ongoing training standards as defined in ASIC's Regulatory guide 146 'Licensing: Training of financial product advisers' (RG 146).
RG 146 defines the initial minimum training standards that an individual must meet in order to provide financial planning advice. It is divided into two educational levels:
- Tier 1: this level of education is required for people advising on all financial products except those defined under Tier 2.
- Tier 2: this level of education is required for people advising on general insurance products (except accident and sickness), consumer credit insurance, basic deposit products and non-cash payment products.
To be able to provide retail financial advice on financial products defined under Tier 1, you must comply with the Tier 1 education level of RG 146.
RG 146 also has three key components: generic knowledge requirements, specialist knowledge requirements and skills requirements.
Generic knowledge refers to having the knowledge of the environment in which the financial planner operates and to understand the context in which the advice is given.
Specialist knowledge refers to the specific areas that ASIC has identified a financial planner needs training in before they can provide advice in that area. There are several specialist knowledge areas in which you may need training, depending on the type of advice being provided. They are:
- financial planning
- securities
- superannuation
- managed investments
- derivative
- insurance: life and general
- foreign exchange
- self managed superannuation funds (SMSFs)
For example, a financial planner who only advises on superannuation may need to complete RG 146 compliant courses in financial planning, superannuation and probably managed investments. However, a financial planner who offers a complete financial planning service to clients would need to be compliant in all specialist knowledge areas. Even though ASIC set out the minimum training requirements in RG 146, it is the licence holder who is ultimately responsible for the advice given. Therefore, ASIC has placed the onus on the licensee to determine what training its representatives will need to complete to meet the training requirements and become RG 146 compliant.
The current training requirement to provide advice on SMSFs is the completion of training in the specialist knowledge area of superannuation. In 2005, ASIC extended the specialist knowledge areas to include SMSF advice as a sub-category of superannuation. This was in acknowledgement of the complexities of this financial product area. While it is not mandatory to also complete an approved SMSF course, ASIC encourages this as best practice. Licensees are also reminded that they have a legal obligation to ensure that they and their advisers are adequately trained and competent to provide the services covered by the license.
The skills requirement of RG 146 states that financial planners providing personal financial advice to retail clients should be able to apply appropriate skills in relation to their activities and the products and markets in which they operate.
ASIC training register
ASIC has a training register that lists all training courses approved by ASIC authorised assessors as meeting ASIC's training requirements in relation to RG 146. The register indicates whether the course meets:
- the generic knowledge requirements
- any specialist knowledge requirements
- the skills requirement
Choosing the right course
There is no specific qualification required in financial planning. However, you should ensure the course you choose is listed on the ASIC training register. Another factor to consider is that the minimum requirements to comply with Tier 1 RG146 are broadly equivalent to the 'diploma' level. Consequently, most licence holders would be seeking the Diploma of Financial Services (Financial Planning) as a minimum.
Short courses versus a formal qualification
While formal qualifications are very well regarded, they are not necessarily a requirement imposed by licence holders. For CPAs who already hold a degree, the decision to pursue additional formal qualifications in financial planning may be more for personal satisfaction than for future employment prospects. That said, a postgraduate level qualification in financial planning such as a graduate diploma or masters provides an excellent foundation for those seriously focusing on a financial planning business.
RG 146: ongoing training
While much of the focus of RG 146 has been on initial training requirements, too many advisers or potential advisers see that as the end instead of the beginning.
It's important that you keep up-to-date with training. Section F of Regulatory guide 146 is all about continuing training guidance. Which means those giving advice should maintain, update and deepen their knowledge and skills on an ongoing basis.
There are three areas of ongoing training:
- maintaining the knowledge and skills, e.g. do you still know the material you learned?
- updating the knowledge and skills, e.g. are you current with all the changes in superannuation rules?
- deepening knowledge, e.g. developing new knowledge and skills
In addition, there are specific requirements that each licensee must have:
- a nominated person responsible for training
- annual training plans for each adviser (including needs evaluation)
- records of training programs