Inside the professional year

A person training to provide financial advice must complete a professional year before they are fully qualified.

To the uninitiated, the process can be a complex landscape involving 1,600 hours of structured quarter-by-quarter training under the watchful eye of a supervisor.

Fourth Line chief operating officer Joel Ronchi told a virtual room full of finance professionals during a lunchtime webinar on Tuesday that with some careful planning, the process can be less cumbersome.

Ronchi, who has more than 25 years’ experience in the finance sector as a practitioner, consultant, executive officer and educator, explained that the professional year legislation was introduced from 1 January 2019.

Roles & Responsiblities of the Professional Year

The three parties involved in a professional year include the supervisor, the licensee and the new entrant, who needs to be in the final stages, or have completed an approved qualification to commence.

Ronchi explained that the candidate has an obligation to maintain a logbook and complete structured training with the supervisor.

“This is a full-time gig for a year split in four distinct quarters, but it’s part of a broader picture that’s part of a career pathway, which can be conducted on a part-time basis,” Ronchi said.

The candidate needs to shadow the supervisor and work across a range of clients throughout the professional year.

“The training must be measurable, assessed and preferably leads to further qualification outcomes,” Ronchi said. “There’s no need to reinvent the wheel here. The best place to start is to look at what you’ve got within your network, such as logbooks or final certificate templates.”

The Importance of the Supervisor

The task of the supervisor (who needs to be active on the ASIC Financial Accountability Register) is significant. The need to dictate the resources to be used throughout the period, the meeting schedule, software, resources to be used and how often will meet.

Ronchi said the supervisor is taking on significant responsibility because they must be willing to sign off on the new adviser being competent once the process is completed.

“Firstly, they need to guide the professional year candidate through the program, reviewing and validating their work throughout the year,” Ronchi said. “The supervisor also has to retain records of the assessment and approve the competence of the new entrant and that the new entrant is legally compliant.”

Clients must be notified in writing the new entrant is undertaking their professional year.

Completing hte Professional Year

An audit of at least five client files showcasing what the new entrant has worked on is also required to ensure that they are ready to go off and give advice alone out in the real world.

“The new entrant also needs to be able to identify and resolve ethical dilemmas as part of the professional year, and be able to hit the road on their own as a fully authorised financial adviser,” Ronchi said.

Once they pass the final exam, they move to the financial advisor stage, and have their final certificate. Then the licensee must notify ASIC within 30 days, and they can move through to be a financial adviser.

The licensee needs to update ASIC records when the candidate passes the exam, and also when the professional year is completed and final certificate is completed, via the ASIC regulatory portal.

Beyond this, there should still be access to the supervisor, so that the relationship is an ongoing accessibility. Records must also be kept from seven years from the date they have been made.

Article Source: https://www.professionalplanner.com.au/2022/09/inside-the-professional-year/

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Fourth Line is a rigorous RegTech risk management and compliance system for advice practices, dealer groups and other wealth management participants. Fourth Line uses algorithmic approaches to simplify the complexity in advice reviews whilst maintaining human oversight, empowering compliance teams to coach and develop strong advice behaviors through data driven insights from advanced analytics for adviser, practice/dealer group and industry benchmark comparison with centralised document storage and access to meet regulatory needs. 

For information email: info@fourth-line.com.au