“I was into you, but I’m over it now
And I was tryin’ to be nice
But nothing’s getting through, so let me spell it out”
— Gayle, abcdefu
Key Insight: Competence is proven through supervised experience and outcomes, not qualifications alone.
Most compliance frameworks treat qualifications as the primary signal of adviser capability. In practice, that assumption quickly breaks down. Competence is demonstrated through supervised experience, judgement in complex client scenarios, and the ability to produce defensible outcomes. (https://assuredsupport.com.au/articles/nothing-to-report-mandatory-internal-dispute-resolution-lodgement/).
This article draws on a past Treasury consultation on financial adviser education standards. While that consultation has concluded and the framework has since evolved, it provides useful context for a question the industry still hasn’t fully resolved.
How should the profession recognise competence in a way that reflects both formal education and real-world capability?
The discussion below uses that consultation as a reference point to examine where the balance between qualifications and practical experience continues to fall short.
Consideration and Consultation
In 2022, industry participants were encouraged to provide feedback on how education standards should evolve. There was a clear recognition that the existing framework, while well-intentioned, risked placing too much emphasis on formal qualifications without adequately recognising practical experience.
Many stakeholders used that opportunity to highlight the operational impact of the proposed settings. This included the cost of additional study, barriers to entry for new advisers, and the risk of losing experienced professionals who may not meet formal education requirements despite having demonstrated capability.
While the consultation process has concluded, the themes it addressed remain relevant. The balance between accessibility, professional standards, and demonstrable competence continues to shape the evolution of the advice framework.
These considerations provide important context for understanding how the current framework has developed and why the tension between education and capability persists.
The proposed amendments
The consultation at the time outlined a range of potential changes to the education framework. These included adjustments to qualification pathways, recognition of prior learning and experience, and greater flexibility in how advisers could meet education standards.
There was also consideration of how structured training, such as the professional year, could be enhanced to better support the development of practical skills. The intention was to create a more balanced system that maintained minimum knowledge requirements while improving the way competence is developed and assessed.
Treasury proposed amending the current structure to allow multiple paths to proficiency – one pathway prioritising experience and prior learning and one prioritising formal qualifications.
Under the Experienced Pathway, individuals with 10 or more years of full-time experience as a financial adviser in the last 12 years would only need to complete a tertiary-level unit on the Code of Ethics to continue providing financial advice.
Under the Qualification pathway, individuals (existing providers or new entrants) who did not meet the requirements under the “experience pathway” were required to complete a bachelor’s degree or higher with at least 8 units in a related field of study in any combination. Units must either be at Bachelor’s (AQF7), Graduate Diploma (AQF8) or Master’s (AQF9) level. Existing providers had until 1 January 2026 to complete any required units.
Although these proposals were specific to that policy period, they reflect a broader and ongoing regulatory challenge. Designing a framework that is both rigorous and practical remains a central issue for the profession.
Subsequent reforms have shifted the focus to embedding education standards in legislation and reinforcing expectations for supervision, training, and ongoing professional development. However, the core objective has remained consistent: improving the quality and reliability of advice outcomes.
Taken together, these developments illustrate how the regulatory approach has evolved, while leaving the underlying question unresolved.
Where things stand now
Since this consultation, the financial adviser education framework has been incorporated into the Corporations Act and is now administered within the broader regulatory system.
The focus has shifted from transitional arrangements to ongoing expectations around competence, supervision, and professional standards. At the same time, broader reform initiatives have continued to examine how to make financial advice more accessible while maintaining appropriate safeguards.
Despite these changes, the core tension remains: formal qualifications are necessary, but they are not, on their own, a complete measure of an adviser’s capability.
This is where the practical application of the framework becomes critical.
Conclusion
If qualifications are treated as the primary signal of capability, gaps in advice quality will persist. The more reliable indicator is whether an adviser can consistently exercise judgement, apply knowledge in complex scenarios, and produce defensible outcomes under supervision.
That is the standard regulators are moving toward in practice, even where the framework still emphasises formal education.
For firms, this shifts the focus from meeting minimum education requirements to evidencing capability. That means embedding structured training, active supervision, file review, and ongoing assessment into day-to-day operations, not treating them as secondary compliance activities.
Done properly, this approach closes the gap between qualification and competence, and positions the business to withstand scrutiny where it matters most: the quality and defensibility of its advice.
If you are not confident your advisers could demonstrate competence under regulatory scrutiny, it is worth addressing now rather than after an issue arises.
We work with financial firms to design and implement training, supervision, and review frameworks that meet ASIC expectations and deliver defensible advice outcomes.
Book a discussion to assess your current approach and identify where gaps may exist.
If you enjoyed this article, we recommend that you read:
- Intent, Process and Outcome: Assessing Best Interests
- How Do Clear Goals Strengthen Best-Interest Decision Making?
- What is the latest ASIC guidance on adviser training and competency standards?
Frequently Asked Questions
Qualifications demonstrate that an adviser has met minimum education requirements. Competence is demonstrated through the ability to apply that knowledge in real client scenarios, exercise judgement, and produce defensible advice outcomes under supervision.
Formal education provides a foundation, but it does not test how an adviser performs in complex, real-world situations. Capability is developed through experience, supervision, and ongoing assessment, not just academic achievement.
ASIC expectations focus on outcomes. This includes whether advisers can apply knowledge appropriately, meet best interest obligations, and demonstrate sound judgment through documented advice and file records.
Firms should implement structured supervision, regular file reviews, documented feedback loops, and ongoing training. Competence should be evidenced through consistent performance and the quality of advice delivered, not assumed based on qualifications.
Focusing only on qualifications can create a false sense of compliance. Without proper supervision and review, advisers may meet formal requirements but still fail to deliver compliant or defensible advice.
