FASEA Education Standards for Financial Advisers

How the education requirements for financial advisers changed

Until relatively recently, the education requirements to become a financial adviser in Australia were widely considered inadequate. Someone could become a licensed financial adviser with a short diploma course and limited practical training. The consequences of that low bar played out across multiple financial scandals, most notably highlighted by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which exposed serious failures in financial advice practices and led to a major overhaul of the profession's education standards.

The Financial Adviser Standards and Ethics Authority, known as FASEA, was established in 2017 to set new mandatory standards for financial advisers. Those standards, which came into full effect by the end of 2021, fundamentally changed what it takes to become and remain authorised to provide personal financial advice in Australia.

What the standards require

Under the FASEA framework, all financial advisers providing personal financial advice must meet three core requirements. These reforms were introduced in response to the Royal Commission, with the aim of lifting professional standards and restoring public trust in financial advice.

An approved degree qualification

New entrants to the profession must hold a bachelor degree or higher in a relevant discipline. Existing advisers were given transitional pathways, including approved bridging courses or equivalent qualifications, to meet the new standard. This represented a significant shift from the diploma-level qualifications that were previously common in the industry. Relevant fields include financial planning, commerce, economics and accounting.

FASEA exam

All advisers are required to pass a nationally consistent professional examination that tests technical knowledge, ethics and understanding of the regulatory framework. The exam was originally introduced by FASEA and is now administered by ASIC. Failure to pass the exam by the required deadline results in loss of authorisation to provide personal financial advice.

Professional year

New entrants must also complete a structured professional year of supervised work experience before they can practise independently. This includes mentored training and assessed practical experience under the supervision of an authorised adviser.

Continuing professional development

Meeting the initial standards is not a one-time event. Financial advisers are required to complete a minimum of 40 hours of continuing professional development each year, of which at least 70% must be in areas directly relevant to their practice. This ongoing requirement is intended to ensure advisers stay current with changes in legislation, products and best practice.

CPD activities must be recorded and are subject to oversight by the adviser's licensee and professional association. Failure to meet CPD requirements may result in loss of authorisation through their licensee and regulatory action if not remedied.

The Code of Ethics

Alongside the education standards, FASEA introduced a mandatory Code of Ethics that all financial advisers must comply with. The Code sets out five values - trustworthiness, competence, honesty, fairness and diligence - and twelve standards that define how advisers must act when providing financial advice.

One of the most important obligations advisers must meet is the best interests duty - the legal requirement that an adviser must act in the best interests of their client when providing personal financial advice. This duty, which existed in legislation before FASEA but was reinforced by the Code, means an adviser cannot recommend a product or strategy that benefits them at the expense of the client. Our guide on general vs personal financial advice explains how this duty applies in practice.

What happened to advisers who didn't meet the standards

The transition to the new standards resulted in a significant reduction in the number of licensed financial advisers in Australia. Many advisers who had been operating under the old regime chose not to complete the required degree qualification or did not pass the exam, and left the profession. The total number of registered advisers fell from around 28,000 in 2018 to approximately 15,000 by the mid-2020s.

This reduction is sometimes cited as a problem for consumer access to advice - fewer advisers means longer wait times and higher costs in some areas. It is also, depending on your perspective, evidence that the old standards were too low and the market needed a correction.

How FASEA's functions are now handled

FASEA itself was wound up in January 2022 and its functions transferred to ASIC and the Federal Government, with Treasury supporting policy development. The standards themselves remain in place and continue to apply to all financial advisers. References to "FASEA standards" in the industry still refer to the framework established during FASEA's existence, even though the authority itself no longer exists.

What this means when choosing an adviser

Any financial adviser currently registered with ASIC and authorised to provide personal financial advice has met the education and exam requirements - that is a condition of their registration. You do not need to separately verify that an adviser has passed the exam or holds the required qualification, because ASIC will not register someone who hasn't.

What you can check, and what may be informative, is the specific qualifications an adviser holds. These are listed on the ASIC Financial Advisers Register and on adviser profiles in this directory. An adviser with a postgraduate qualification in financial planning or a related field has gone beyond the minimum requirements, which may be relevant if your situation is complex.

You can search for a registered financial adviser near you on this directory to view qualifications, authorisations, years of experience and any disciplinary history. For a step-by-step guide to using the register, see our guide on how to verify a financial adviser's ASIC registration. Advisers are listed across New South Wales, Victoria, Queensland, South Australia, Western Australia and all other states and territories.