Licensees are “flying blind” around FASEA professional year requirements, which could exacerbate declines in adviser numbers as the big institutions exit the industry, an educational consultant has said.
MyIntegrity in Practice principal Joel Ronchi told ifa that advisers and licensees in the group’s FASEA preparation classes had expressed confusion about what their obligations were under the professional year program, which had been deprioritised relative to more urgent exam and education requirements.
“Fundamentally, licensees are overwhelmed by the entirety of the FASEA standards and the professional year has really taken a back seat relative to all other aspects, as the professional year is not necessarily a pressing issue for most,” Mr Ronchi said.
“As such, there’s not a lot of engagement in this area and some smaller licensees are flying blind in terms of what the requirements of the professional year are, who is eligible to enter a professional year and what kind of checks and balances are in place to ensure a nominated new entrant meets the requirements.”
Mr Ronchi added that licensees were unsure of whether responsibility to check a new entrant’s educational qualifications lay with them or FASEA. There was also a more general concern that smaller advice groups would now have to bear the brunt of onboarding costs for new advisers, given large institutions had largely exited the advice sector.
“There’s been good commentary around the professional year being built when the large ‘instos’ were still in the financial advice game and the expectation was that they were most likely going to carry most of the burden in developing and implementing the professional year,” he said.
“That is no longer the case and now the obligation falls to individual licensees and practices within their networks.”
In a recent webcast hosted by ifa and BT, Fortnum Private Wealth group managing director and chief executive, Neil Younger, said the dealer group had just three advisers currently going through the professional year program.
“We’ve got demand from some additional people across the network who would like to start, so we are working collaboratively with that current group,” Mr Younger said.
He believed advice practices had held back from taking on new starters under the program because of the prohibitive costs and a focus on bedding down the other FASEA standards.
“I think for a period of time advisers were looking at how do they run their own businesses and hadn’t turned their attention to thinking of new people coming in,” Mr Younger said.
“As an industry we were getting our heads around how does the program work in a practical sense, what does it cost to get people through the program, because traditionally the time frame for getting an adviser from starting into being productive in an adviser practice was shorter.
“Now it’s longer, so the cost to sustain through that period is longer and I think adviser practices have had to prepare for that at the same time.”
The corporate regulator has issued a consultation on its new breach reporting reforms for licensees, saying the new rules will correct “prolonged an...
Financial services minister Jane Hume has conceded the implementation of the FASEA reforms has had a devastating effect on the business environment fo...
Two-fifths (42 per cent) of people who aren’t currently advised have indicated they will be more likely to see an adviser now than before the pandem...