The financial planning industry is highly regulated and there are strict education requirements that you must satisfy to become a Financial Planner. These are governed by the Corporations Act 2001; regulation 146 better known as RG 146. This act requires all practitioners to hold an Australian Financial Services Licence or to be authorised as a representative of a licence holder.
This simply means that if you wish to provide financial planning advice you must satisfy the training requirements of this regulation. Additionally, once the training has been completed you also need to apply for a licence before you can dispense any advice.
Obtaining a licence also requires that you attain certain levels of experience within the industry. Whilst gaining this experience you’re required to operate under an existing licence holder as an authorised representative..
RG 146 defines the standards that individuals must satisfy and it is divided into two educational levels:
- Tier 1. This defines the minimum educational requirement for people advising on all financial products except those defined under Tier 2
- Tier 2. This defines the requirements for people advising on general insurance products (with some exceptions), consumer credit insurance, basic deposit products and non-cash payment products.
In addition to these tiered requirements, there are also general knowledge and specialist knowledge requirements, as well as career specific skills competencies.
ASIC has identified several specialist knowledge areas that need particular types of training. These include:
- Financial planning
- Securities
- Superannuation
- Managed investments
- Derivatives
- Life and general insurance
- Foreign exchange
- Self managed superannuation funds
To outline an example; a planner who only wishes to provide advice on Insurance will only have to complete 2 modules; Fundamentals of Financial Planning and Insurance. The certification would therefore be RG 146 Compliant for Insurance.
For planners who wish to offer a complete service to their clients, ASIC requires that they be competent in all specialist knowledge areas. It is important to keep in mind that the licence holder overlooking the planner in training is ultimately responsible for any advice given out by the trainee.
In an effort to maintain professional standards, ASIC maintains a register of approved training courses and it is incumbent upon potential financial planners to choose the appropriate course listed in the training register. Formal qualifications are highly regarded by licence holders, although they are not an absolute requirement. For example, a Certified Practising Accountant who holds a degree may find their postgraduate qualification is an excellent foundation upon which to establish a successful financial planning business, and of the completion of a financial planning course is an added bonus.
