Speaking at a Kaplan event in Sydney on Wednesday, Sarah Abood, chief executive of the Financial Advice Association Australia (FAAA), said there is a “very significant demand supply imbalance in financial advice right now”.
“At the moment, we’ve got about one adviser for every 1,695 Australians,” Abood said.
“That’s now, that’s not looking at what we’re going to see in the next few years as more and more Australians retire.
“In 2030, we’ll move to about 136,000 Australians retiring every single year. If you think about the numbers and what that means for financial advisers, we already have far more demand than we can cope with and that’s going to continue to increase.”
Along with the increasing number of retirees, she noted that there are not enough new advisers joining the profession.
“Last year, we had something like 317 new entrants,” Abood said.
“While it’s good to see those numbers improving, and they are getting better, we could put a zero behind those numbers and we still wouldn’t come close to satisfying the increasing demand for financial advice.”
Through the Advice Academy, the FAAA and Kaplan are aiming to address the shortfalls and gaps in the process of bringing new advisers to the profession.
“We believe that what we need to do is support the professional year in a consistent and standard way,” Abood said.
“I hasten to add that lots of people are doing a lot in many different ways to try to support people and candidates and we absolutely don’t want to replace that. What we want to do is create a central structured program that the whole profession can benefit from.”
The program, she said, has three core goals, with the first being “very explicitly to build and grow the pipeline of new entrants”.
This will focus on attracting people from three broad categories: high school students, career changers, and overseas students.
“Secondly, we want to offer a best-of-breed professional year (PY) tool tracker, so the tools and systems that people need to put the candidate through these programs are available,” Abood added.
“Lastly, we want to do more than just meet the minimum. I hasten to add that we’re not trying to add more requirements on to regulations that are already pretty stringent. This is not about going above and beyond the law.
“This absolutely is about making sure that these new entrants are job ready and have the skills that they need, the confidence that they need to go into a meeting with a client to confidently present strategies to talk about fees, to talk about the benefits of advice.”
While the full details of the Advice Academy are not yet available, Abood explained that there are a range of ways it will look to provide support for new entrants and advice firms bringing them on.
This includes job-ready tools and resources, an extensive range of practical content to choose from, online peer groups for PY supervisors and candidates, in-person and online networking events, external mentoring support, paid and unpaid internships, the PY tracker, and financial support for new entrants.
“We want to create PY graduates who are truly job ready at the end of the program, have a level of consistency in the experience that they’ve had, and are able to create immediate value for the businesses that they’re working in,” she said.
Importantly, Abood said, the program will not be limited to Kaplan students or FAAA members.
“We explicitly want to create something that is an asset and a resource across the profession,” she said.
“Really, the goal is that everyone can help get involved in growing the profession. We can’t just rely on a few large institutions now to do the heavy lifting. We really do all need to come together to try to solve this one.”
