Speaking at a media briefing in Sydney on Wednesday, Financial Advice Association Australia (FAAA) CEO Sarah Abood said the association want to ensure that the profession is not just “reacting to legislation or crises” but getting on the front foot and “leading as a profession rather than being led”.
One of the “big themes” that Abood flagged for the coming financial year that can help the financial advice get on the offensive is increasing the number of advisers and regrowing the profession.
The latest numbers show that there are now 15,589 advisers in Australia, which represents a drop of almost half since 2019.
“We’ve lost a lot of experienced advisers that we didn’t need to lose, we didn’t want to lose, and their clients are trying to find new advice relationships and finding that hard, so the loss of that experience has been really problematic,” Abood said.
“But the other point that we’re looking at now is that there’s been an even bigger problem in new entrants. New entrants have crashed. They crashed to zero straight after 2019.”
While there have been improvements in new entrants joining the profession in the years since, she said there are currently just 312 advisers who first provided advice in 2023.
“It’s not enough to offset the advisers that are going to retire. We could put a zero behind that and not really impact meaningfully on the supply of advice. So, we must focus on that,” Abood said.
“It takes four years to train an adviser, so we see this as a really urgent problem and something that we need to address in a really meaningful way really, really soon.”
While she noted that some advisers that are running profitable businesses with “more demand that they can deal with” may not mind the lack of competition in the short term, it is not healthy for the broader advice sector in the long term.
“We know that a profession that’s in decline is not a strong profession. It’s not going to end up well if we don’t stop that,” Abood said.
She added: “We’ve got this massive demand-supply crunch that’s going to make our current problems even worse. And of course, per advisor costs. They continue to go up as numbers decline. So, there’s a whole lot of reasons why we think getting more numbers into the profession is absolutely critical and an urgent problem for us to address.”
Among the ways the FAAA is looking to bring more advisers into the profession is through an advertising campaign that will specifically promote financial planning as a great career, which Abood said would be targeted at students and potential career changers.
“We want to really get more people considering this career, get more students coming through these degrees, get the front of that pipeline up again,” she said.
“We haven’t been in market, I think forever, talking about why you should consider financial planning as a career. We’ve often relied on the children of existing planners, clients and so on, but we believe the time has come to really be more overt and that campaign will run in next financial year.”
She also pointed to the previously announced Advice Academy, which the FAAA is launching in partnership with Kaplan to provide additional training and support for professional year candidates.
“Over time, the Academy will help connect these candidates with employers so we’re not losing people at the end of their degree,” Abood added.
“Help them come through that program and help them come out the other end, more capable and job ready for the practices that they’re working in.”
Way too much diplomacy Sarah. U need to put on your hobnail boots & go after the minister & government.
FAAA will be saved by their soon to launch category for “qualified advisers”…
It is not up to financial advisers to rebuild the industry. The Government will be the ones to stop new entrants and they are doing a fantastic job of it. Congrats to Stephen Jones especially.
What needs to happen is simple – no advice is affordable for the majority of retirees, so they end up on age pension as they literally haven’t planned for their retirement. The government will then be worried how they can feed Australians and house them because the retirees with no advice and no savings are spending everything they have. Oops hang on – I think that may be happening now! Hmmm and you say in 2019 we had over 31,000 Advisers and now we have 15,589? Wow that is a problem…. I don’t know the government see it as a problem though and until they do good luck building those numbers.
So, at this pivotable point…
1)The government will take credit for all their overseeing of such a corrupt financial planning industry and advertise how good financial planners are and getting financial advice is (this wont happen any time soon as Stephen Jones couldn’t care less about the financial planning profession) or…
2)They will push the “qualified financial adviser role” – doesn’t matter what they call it as the ave mum and dad haven’t got a clue on how to invest their money and unions/industry funds and banks will benefit supporting a Royal commission in say 5-10 years time. This for the current government is acceptable as they only think short term and it’s all about what votes they will get in the next election. With Industry Funds and Banks on your side – that is a compelling reason for them to go ahead with this step.
So, whilst this is all playing out – and should labour get back in – financial planners either sit tight or change professions to a more fair and equitable employment/business. They are not stupid enough to stay – these are intelligent qualified people in the main. At this time – financial planning would not be something I would entertain going into at all.
A profession in decline is also not good for the association representing that profession. Bit of advice to the FAAA…concentrate on stemming the outflow of your existing clients rather than trying to bring on new ones. That is how most business people would approach it!
“leading as a profession rather than being led”.
Well, I suggest we need a new leader.
Sarah the financial advice industry is in decline because every government from Rudd onwards has attacked the industry in favour of union run super funds. The unions want real financial advisers eliminated. Their objective is crystal clear. It has become so toxic and absurd that innocent real financial advisers now have pay compensation to people they have never met, never given advise too, for the losses these people have suffered from the failure of fund managers the advisers have never had anything to do with. Who in their right mind would sign the dotted line to be a financial advisers. Signing to be a financial advisers instantly saddles the new adviser with a significant and ongoing CSLR liability and ASIC funding fee. Add to this the s99FA deliberate attack on the ability for real financial advisers to receive fees for advice provided on superannuation and you have a recipe for bankrupting the industry. There is no way that a new adviser can survive in the horrendous regulatory environment. Another adviser exodus is about to manifest and it will accelerate quickly. Every adviser has an eye on the numbers at present knowing that as the numbers fall the remaining adviser will be hit with a significantly increasing CSLR liability and ASIC funding fee. That’s the professions biggest threat and it’s been done deliberately.
Confirms I’ve made the right decision to email the FAAA and tell them I won’t be renewing. 28 years a member and I can’t think what a mistake that was.
Professionals don’t belong to unprofessional associations. The FAAA is conflicted, confused and as it relates to this article too late.
Dear FAAA, We told you, We warned you, we begged, you did not listen or care.
Don’t be like me.
The FAAA could have spent money on challenging the stupid legislation put forward to the senate or lack of follow through and bastardisation of the qoar. Instead? Waste their current members money on trying to get more into advice even if we have py they won’t be so stupid as to joint the faaa. Ineffective and impotent. Advisers should be change to the cfmeu
Imagine being a young person studying at University, coming out with a huge HELP debt, no real hope of purchasing a house without the assistance of your parents and then being unlucky enough to have chosen financial planning as a career. The mental health implications would be real. The FAAA should be focusing on changing why this is the worst career choice anyone could make. Much easier and profitable to be an accountant or a lawyer.
Even a mortgage broker with lower barriers to entry
That is precisely me. Which also explains why a spent so much money at my local liquor merchant.
It’s fun explaining my poor decisions to my wife whilst paying down my HECS debt and struggling to save.
At the same time, working long hours and watching the commerciality of my degree and post graduate studies fall into the toilet thanks to bunch of flogs in Canberra.
It’s really great.
are you being sarcastic?
I thought it was just me. This sounds like my life.
I really should have done engineering.
SGC should be made voluntary – imagine a young person getting an 11.5% pay rise to help save for a roof over their heads and able to start a family?
the Superannuation system is broken.
Or real estate.
Lawyers and accountants are going to be replaced by AI.
How about running for federal parliament? Politicians won’t be replaced by machines anytime soon.
Shame. Machines can be programmed to be honest. I quite like R2D2.
Fee commissions are an issue. The reduction of commissions from Life Insurance has turned away Financial Advisers. Also, the fee-for-service model needs to be fixed. The law should be changed to allow Fund Managers to pay commissions. Why do mortgage brokers receive commissions from lenders/banks, and financial advisers have been banned from receiving commissions from fund managers? Because of the best interest duties, you must put the client’s interests before yours. The law must change to attract new entrants, and funds managers return to pay commissions again.
Joining this profession is like buying a car and being told you’ve got to help pay for all the accidents the previous driver had in it.
I would rather see my FAAA membership fees spent tackling the conflicted Government & ASIC on the increasing financial and legislative burdens they have imposed on us. Whether this be engaging lawyers to sue the Government or paying to advertise in the media as to the wrongs from Government (as the Mortgage Broker’s successfully did), surely this should be a more pressing issue and better way to spend money at present, rather than trying to recruit more individuals to become pawns in the Government, ASIC and ISA chess game!
I believe the reconciliation day for ASIC levy and CSLR is in 3 days time (30 June).
Round numbers 3k for ASIC and 5k for CSLR.
Then there is dealer fees, phone bills, car bills, office rents, etc.
CSLR is likely to drop the adviser numbers below 15000.
There is unlikely to be any turn around in the short term.
Questionable the peak body would waste members money on this instead of advocating or helping their membership? The most impotent representation of any profession has been a big part of how we ended up here as the most over litigated over taxed and red tape choked advice profession globally.
Advertising FP as great career right now is a con. That is like saying come and work on the titanic the safest ship in the world knowing that it is just about to hit an iceberg and sink…
Everyone knows the reasons why adviser numbers are in decline so as an association why not focus 100% on helping to fix that? Whatever you have been doing as an association has not been working in this regard so stop doing the same old thing and change your strategies to help ensure this once great profession becomes just that again in the future. Then commence the recruiting campaign but not before.
These guys are out of sight and out of mind. Who would like to join when the maintenance cost is around $40,000p.a, and no sign of it coming down
Who is the right mind would want to be a financial adviser? It is easier to give unlicensed advice, and if you get caught ASIC does nothing and all licensed adviser foot the bill.
So true
And why Sarah…your org has over past years contributed to this by inaction or being led by the nose by your previous dependence of membership dollars from large vertically integrated institutions. Your comments ring hollow!!
Have to say I’m a bit cynical about spending money advertising advice as a career. We have 2 PY candidates and have blooded plenty of graduates. There is plenty of talent at Unis with economics/business/ commerce/maths/finance degrees who can all upgrade easily with a Kaplan Masters while they work as CSMs and Paraplanners. The chokepoint is financial planning businesses offering jobs to these people with view to moving them through PY. We aren’t a profession like law and have less sense of the history and traditions of our profession. The risks of investing in a PY candidate don’t make commercial sense to many small and medium businesses when holding the candidates for long term is a marginal proposition. So Government action (I know pigs might fly) is going to be needed to either make it cheaper, or subsidise the process.
A drop in 50% and the government is fiddling with the deck chairs. Call to action there are 200,000 suitably qualified accountants that will fill the void.
Accountants provide awful financial advice
Accountants provide unlawful unlicensed financial advice, and ASIC does nothing about it.
Huge part of the problem and always rubbish advice. Just look at the smsf csolr payments. Disgraceful
You mean the back packers on working holiday visa’s working at Hesta will fill the void.
Nope, there are 200,000 accountants who are not suitably qualified at all to provide financial planning advice.
Telling people to buy investment properties and set up SMSFs in order to generate more accounting fees is not financial planning. It is conflicted, unethical, self interest.