One individual who has this issue front of mind is Kaplan Professional chief executive Brian Knight, who gave a frank assessment of the profession’s issues in bringing in fresh talent: “We are not competitive or attractive to a range of university graduates or new people.”
Speaking with ifa, Knight diagnosed a number of issues that are discouraging young talent from considering financial advice as a career, foremost being the perception that there is a lack of clear progression.
“When you look at it compared to an accountant [there is a lack of structure],” he said.
“[A graduate] goes to uni and they say ‘OK, I finished my commerce degree. I joined an accounting firm. They put me through my chartered accountant or my CPA. They’ll give me work experience before as I do that, and then I go to the next level. I become a junior manager, a manager, and then a senior manager, partner, the path’s laid out for them.”
In Knight’s view, this kind of structure simply does not exist for potential new financial advisers. Though financial advisers have their professional year (PY), many companies simply do not have the resources to train them, leaving little motivation for graduates or those looking to change careers to take the plunge into advising.
“What we do have to do is make it more attractive to attract new entrants as well as career changers. And at the moment, it’s not,” he said.
For Knight, there are several solutions to this problem, one primary answer being aligning the values of the profession to those of younger people.
“If you’re an accountant, it’s very regimented what you actually do in your business life. But [when you are an adviser], you’re dealing with [a varied client base],” Knight said. “You’re dealing with everything from their ability to save to how they educate their children to how they plan for their future. How they look after the transition of wealth to their children, to their superannuation, the technical aspects of it – it’s such a broad-spectrum career.”
Another obstacle is the often-cumbersome regulatory requirements and professional standards required to become an adviser. Not only can this process prove frustrating for those considering a PY, but it can be an expensive endeavour for a firm: “There’s this frustration that this is all too hard. In many cases, [potential supervisors] are trying to run their own businesses.
“We’ve got to be able to show those licensees who have that sentiment that there are ways you can help develop the adviser quicker, better and more effectively so that your practice benefits and you get someone who is going to enjoy and becomes part of your business going forward.”
This includes creating better education opportunities that put talented potential advisers on the fast track. While a private organisation like Kaplan is working towards this with the Financial Advice Association Australia, a broader change is needed both in terms of legislation and public universities, according to Knight.
“We’ve got to have legislation. The education has got to be changed. We need the minister to be able to do that. We need to be able to start to re-examine what we teach and how we teach it. And we need to work out, how do we then better support someone, rather than just say that you’ll do 100 hours and you’re an adviser,” he said.
Another way the issue can be addressed is by helping firms understand the benefits of bringing on young, energised advisers. With Gen Z now entering the workforce, a generation of internet and technology-literate future advisers is becoming available.
“[If we can’t attract young people], we’re not going to have people who can use the latest technology, who can bring some fresh thinking and who’ve got a different perspective,” Knight added.
For a generation that values flexibility, versatility and variety, a career in financial advice can offer all these things. However, the profession is struggling to replace a now steady outflow of workers and strides need to be made in attracting new talent.
As stated by Knight: “I think we’re not telling [our] story well enough about the importance of advice to everyday Australians and what a rewarding career it can be.”
I don’t hate anyone enough to recommend they become a financial adviser in Australia.
He is selling courses so needs lots of new entrants good luck with that!
Potential pitch ” Come to the financial advice sector for your chance to contribute to the CSLR and provide a bailout fund for losses that you had no responsibilty for.”
Sure kids come to advice we have
Overt administrative requirements that drive up cost and stop us doing what we actually do
Financial Accountability for wrongdoers who phoenix themselves back into practice
Tonnes of businesses with aging practitioner directors who are looking at maximising succession value, so good luck gaining any equity before its priced out for you
A service that few are willing to pay for that we cannot feasibly scale down to their ideal price
Stagnant wages for 20 years
Political punchbag/playthings with little to no discretionary power given toothless associations
False promises of becoming a profession, with a licensee framework that halts the ability to become a profession, and none of he subsequent financial benefit or respect a profession brings
Not exactly an easy sell is it ?
I love when they get the boss of an education company to tell advisers what they can’t do well.
Just like when they got a crusty old just to say what advisers can’t do well … royal commission / LIF / consents.
And when they got a lawyer to say what advisers can’t do well … Quality of advice review / DBFO
And when they got some ethics boffin to say what advisers can’t do well … code of ethics.
I don’t think the “clear pathway” is the real issue… I for one, could not in good conscience tell a young person to put their time and money into this industry as a career. We have a constant target on our back, it’s costing us more and more every year to open our doors and help our clients, and yet we are still seen as the evil wrongdoers and the cause of everything wrong in the world. Those of us who are still here, are here because we’ve been here so long it’s worth sticking out but no young person in their right mind would look at the risk V reward and think it’s a great idea.
What on earth do people pay their FAAA memberships for if this organisation can’t support smaller Licensees with PY implementation…