Adviser Ratings’ Australian Financial Advice Landscape 2020 report surveyed academics from nine universities and found there was “a concerningly high drop-off” in the number of financial planning students who were able to complete their degree and secure employment at an advice firm.
The report found that 44 per cent of students who enrolled in an advice degree were failing to complete their studies at all, while 28 per cent graduated and went on to an unrelated career. Just 28 per cent of those who started a financial planning degree ended up working at an advice firm after graduation.
Academics reported that the main factors turning their students off a career in advice were the challenges presented by the FASEA professional year requirements, as well as a negative public perception of being an adviser following the royal commission.
The report also warned that given these trends, it was unlikely that all universities would be able to maintain their range of advice degree programs for much longer.
“Financial planning courses cost more than accounting and there are far fewer students to provide economic scale for providers,” Adviser Ratings said.
“Unless higher education providers can attract more students, they will be forced to shut down financial planning degrees, further stunting supply.”
At ifa’s Business Strategy Day in March, FASEA chief executive Stephen Glenfield shared that approved degree enrolment numbers had grown to 1,200.
The Adviser Ratings report noted that while the education standards had helped in establishing a consistent skill base for the industry, graduates were still finishing advice degrees without all the skills necessary to become a financial planner.
“FASEA’s accreditation of programs and courses has improved consistency of content taught to new entrants to the advice profession, and lifted competencies of existing advisers,” the report said.
“Ethics and professionalism for the first time is now a core component of education requirements. However, more focus is required on the development of trust and relationship skills and there are doubts if higher education providers are equipped to practically develop students’ skills in these areas.”
disgraceful execution and lack of care by government, poorly understood implications, unfairly punishing good people.
Years ago I steered my son away from our planning business and into engineering (he is a great with people as well as good with figures). He is thriving in another small business whilst ours is about to close forever.
I did the same with my two children. Accounting and Psychology. I told the second one he would need the Psychology degree if he became a financial planner.
I suppose that I am one of the lucky ones then. I completed my bachelor’s degree in accounting and financial planning, was already working in the industry when I started, and have commenced my professional year. When I was doing my studies, it was surprising to learn that many of my fellow students, had no idea about what being a financial planner/adviser was about and certainly did not know about having to do a professional year and the exam. I would be interested to know is that the reason why 44% failed to complete their studies or it is for another reason.
Why do the 72% students who don’t plan to go into advice study financial advice? The courses don’t really qualify you for anything else and an arts degree would be more fun.
Keeps their parents happy
Let’s do some basic numbers. There are 1,200 advice students taking an average of 3 years to finish (Undergraduate degree or Graduate Diploma). That means 400 potential recruits per year of which 28% plan to go into advice. That is 112 potential new advisers a year minus attrition before they become fully qualified.
That means in about 180 years there will be 20,000 new adviser to replace the current advisers.
Sounds good.
Low and behold the reality is demonstrating exactly what does against all this FASEA BS were stating from the start. This is the problem when academics take over the arguments and regulation of an industry.
Although technical level is important for financial planning, the pre-FASEA requirements would generally create component advisers. The real job is about client relationships and understanding what clients are actually trying to achieve. A university degree will do stuff all to provide this. Experience is the real key, yet they have decided to force as much experience out of the industry as possible with the BS education requirements.
This whole FARCEA just yet again goes to show, the so called academic experts that try to tell everyone else what they should be doing, clearly have no real world practical experience to really know what they are doing. Idealism is great on paper but will now result in many Australia’s being unable to access valuable financial advice.
This is what I get out of the article – 72% of financial advice students are smart enough to realise financial planning is stuffed; 28% of students haven’t woken up yet; and Stephen Glenfield is still on the speakers circuit trying to put lipstick on a pig, even though FASEA is now defunct.
Giggity. Statement of the month! Glenfield desperately trying to justify kissing the pig.
Congratulations Kelly O’Dwyer
This is saddening and sickening. The politicians and special interest groups responsible for making this SO hard for our industry should be publicly called out and shamed. This is what we are paying our public servants to do! Yes, I’m looking at creatures like Jackie Lambie et al. FARCE-IA is a scourge on our industry. Oh well, just as well the kids are opting to do other stuff outside our ‘once great’ industry because with FARCE-IA pushing all the older (read EXPERIENCED) advisers OUT there’ll be nobody to train the new kids on the block.
Of course, the necessity of a Professional Year would not be a deterrent would it ??
Why would any new graduates want to come into the most over-regulated, excessively charged Profession in Australia today? They also would be putting their necks in a potenatial noose for vexatious clients to make complaints through AFCA which have no chance of success but will still potentiatly cost the adviser $tens of thousands to dispute.
I have been a planner for 34 years (I am also a Chartered Accountant) and am a director and shareholder of a Boutique Licensee which has had it licence for 20+ years.
With all of the above I could not possibly encourage any new graduates to join this profession.
ASIC, AFCA, FASEA, the list goes on.
My advice to these students would be to find another career rather than Financial Planning. The industry is cooked and you are basically a political pawn.
Part 2…I wonder just how many Ethics and Professionalism courses have been completed by our illustrious Federal Ministers and Industry Regulator Management for them to perform their duties? Mmm…
None of them have shown any reason why they need to be upskilled in these areas lately have they? Pffffft…!
Josh Frydenberg and the liberals have basically decimated an entire industry/profession.
Anyone surprised? This profession is being destroyed on so many levels why would a student choose to be a financial planner. In a few years time the only advice you will get will be from your conflicted union fund, just like the ALP planned years ago, while the LNP sat back and did nothing.