Highlighting the stress induced by the new educational requirements, coupled with a “tsunami” of new regulations, AFA CEO Helen Morgan-Banda likened the changes in the industry to a “pincer movement” in her opening address to the AFA Conference.
“I want to acknowledge today the very real distress many highly experienced advisers who are, or have been, part of the AFA family have felt at the educational and compliance demands placed on them,” Ms Morgan-Banda said.
“Adviser numbers are decreasing at significant — some might say, deeply concerning — rates.”
The latest data shows that 16,070 people have passed the FASEA exam. Of them, 14,070 are still on the Financial Adviser Register, 310 are new entrants and around 1,650 have since left the register.
“Others have said they will not do more study beyond the exam,” Ms Morgan-Banda said.
And while there are still a few opportunities to pass the exam, the trend, she noted, is clear: there are fewer advisers at a time when there is a desperate need for more.
“Advisers are being caught up in a pincer movement on the road to professionalism which needs to be addressed,” she said.
“On the one hand, there is the ever-increasing compliance burden, and associated costs. On the other is the need to meet further educational requirements by the end of 2025,” Ms Morgan-Banda highlighted.
She revealed that AFA has been approached by many “highly experienced” advisers who are being forced out because “they cannot, or don’t want to, meet the new educational requirements”.
“Then there are others who have run successful practices but are being overwhelmed by increasing compliance costs and other legislative and regulatory changes impacting on products and how they can be offered,” she continued.
But another “disturbing trend” is emerging, Ms Morgan-Banda warned, with graduates said to be disinterested in a career in advice.
She said: “The number of graduates entering the profession each year is tiny. The professional year as it stands is difficult to sustain for either graduate or employer. Without change, there simply won’t be enough financial advisers to meet demand.”
She, however, believes there are signs of better times ahead, such as the Treasury’s announced review of the ASIC industry funding model, set to commence in 2022, and the inclusion of the 2021 ASIC LIF Review into the Quality of Advice review.
“In my early discussions with sector leaders, these reviews are seen as critical opportunities to ensure the sector’s voice is heard and taken notice of,” Ms Morgan-Banda said.
She is also confident the newly released ASIC Corporate Plan will ensure the corporate regulator works towards changing how it administers the law to minimise the costs and burdens of regulatory requirements for its regulated populations and consumers.
Someone should remind Frydenspend, Hume & Co about the (Liquor) Prohibition. The more you make something illegal, the more you create a parallel economy. With Hayne2 etc, it is getting worse. Hence the current mess.
hahaha – 2 sets of rules. There will be no industry left in an unlevel playing field. Unauthorised accountants (the so called pillars of financial services) blatantly providing ‘advice’ to tax return clients – super contribution strategies, share purchases and sales etc. That’s like sharing the road with unlicensed drivers. It’s a joke.
I think we’ve been telling our Industry Associations that if you leave the gate open, the horse will bolt out since 2016….especially in regards to adviser numbers and also graduates…..now in 2021…after the horse has bolted, you’re sympathizing and acknowledging problems. These people are usually intelligent to rise to these ranks so what else is going on here?
I think we’ve been telling our Industry Associations that if you leave the gate open, the horse will bolt out since 2016….especially in regards to adviser numbers and also graduates…..now in 2021 you’re sympathizing and acknowledging problems. These are usually intelligent people to rise to these ranks, so I can only think that they must be corrupt, morally bankrupt or the bodies they represent are so self absorbed they need a complete overall….what is it?
Agree with all comments so far. It’s only words without actions. Noting not many comments as expected because there are less advisers and few have time to read these pages. I’m out and couldn’t be happier to be out. After 31 years, it became ridiculous to remain. It became unethical as under the new methods, you cannot support all who need help and only direct your attention to the very wealthy. I was faced with having to disconnect with over 1100 long term clients. That can’t be done in a country town/city. I was faced with selecting my most wealthy and charging them more. All this was a conflict to what I stood for and why I started so many decades ago. No complaints from clients but I was forced to consider this massive change that would impact all clients and compromise my standing in the community. Many are staying because they cannot afford a exit due to debts held and values of business. The industry will fail if no massive swing back to some normality. I enjoyed a great career but the later years of stupidity from government and regulators made it impossible to continue a d serve the public in a efficient manner and offering true value. It’s always been said that the pendulum will swing back but it never has.
Well said, and I hope you enjoy the freedom from stress that the industry is loading on us all. I’ve hung in there after 30 years but can relate to everything you said. I’m in the process of letting go many long term clients due to the impossibility of delivering the legal nonsense to all of them for the price that we must. it’s a painful process. The bureaucrats and lawyers who make up these rules have no accountability to everyday Aussies who need help. Enjoy your freedom, it’s very appealing more days than not now.
Josh Frydenberg (ex Big Bank director) and Jane Hume (ex Australian Super Policy Adviser) have nearly completed their work. Decimate the financial advice industry so as to expand super fund’s conflicted intra-fund advice networks, and allow the banks to commence robo-advice.
Till now, they have been assisted with their endeavours by the FPA (and to a lesser extent the AFA).
Very true! Massive damage created by this LIBERAL government!!
Last time I heard “pincer movement” used was a tank battle in a WW2 movie! LOL So the term is very appropriate.
We need to stop wingeing. If you want to remain in the profession – get the studies done or leave. Insofar as existing regulation is concerned it is what it is.
What we need to do is start t he process for a root and branch review of the Corporations Act. The rest is tinkering around the edges. In the mean time those of us that remain in the profession will be able to charge a premium for our services as a direct consequence of supply and demand imbalances. This will more than offset the additional costs associated with current legislative and compliance pressure.
Be prepared for the fact that – like the submarines – the full review and re-write of the Corps Act will only complete when the war is over / many have retired from the profession. But that’s politics!!
Your comment ‘existing regulation.. is what it is’, is not correct.
The whole point is there is wave-after-wave of *new* regulation. The latest being the new breach reporting starting 1 October. Where does it end, who knows?
So, the bit about ‘we need to stop whingeing’ – well, good luck with that. Maybe after our heads stop spinning.
Lots of talk, discussion, opinion, media reporting blah blah blah – but is anyone at policy regulatory level listening? let alone acting and maybe sitting up and just fixing 1 thing??? If you are a real estate agent, mortgage broker, etc. well
done – you picked the right career. Politicians love houses and credit – an economy fueled by a housing boom buys lots of votes. As for financial advisers – well we all simply don’t contribute to that vote count and as such our elected leaders don’t place any value on us at all. Cynical view you ask? Dig a little deeper and see what you find.
“In my early discussions with sector leaders….” – please explain who these people are and represent Helen???
[b]Hume, Frydenberg, LNP & ASIC keep saying recently they want to make Advice more Affordable.
Yet their actions are the EXACT OPPOSITE. [/b]
Every month there is ever increasing BS Red Tape Costs Added, More BS REGS, More mind numbing reports and none of it helps clients.
These Canberra bubble bureaucrats do nothing but INCREASE COSTS at every turn.