Negative mainstream media coverage of financial advisers will result in a dearth of young people seeking out a career in the profession, the AFA has warned a parliamentary inquiry.
In its submission to the PJC inquiry into adviser standards, the AFA warned that a number of developments may lead to a reduction in adviser numbers, including prospective financial planning students being scared off by recent media scrutiny of the industry.
“The recent avalanche of negative media coverage about financial advice will invariably impact upon the interest in pursuing a career in financial advice, or enrolling in a financial planning degree,” the submission states.
The lack of demand from prospective students is one of a number of concerns the AFA has raised about the push to introduce a degree minimum standard for advisers, which it argues cannot be achieved “in the short term”.
The submission states that that while the AFA “strongly supports an increase in education standards” that policymakers need to be wary of the potential fallout from hasty implementation of new requirements.
“We are concerned that if these changes are pushed too quickly that we will see a significant reduction in the number of practicing advisers,” the submission states.
“This reduction in the supply of advisers may also create a significant increase in the cost of advice placing it out of the reach of many Australians that desperately need it.”
In addition, the AFA argues that older advisers may leave the industry at a faster rate than they would have otherwise, which would add to a reduction in practitioner numbers.
In a similar vein to the AFA submission, 33-year veteran adviser Dean Evans has also written to the PJC inquiry asking that they consider an exemption to rising education standards for older advisers.
Mr Evans – who holds an economics degree from Sydney University including studies in pure mathematics – said the importance of work experience is often under-estimated.
“Advisers who have more than 20 years’ experience, and are still advising beyond age 60, are doing so because they have a commitment to loyal and trusting clients who have been exposed to the adviser during the best and worst of financial times,” Mr Evans wrote.
“Indeed, continuity of clients is the true litmus test.”
Finsia, by contrast, has argued that “grandfathering” should not be permitted for existing advisers, but that all practising advisers should have to meet new standards before a specified deadline.
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