While compliance and affordability may be key challenges for financial planners already in practice, it is the path to becoming qualified that is most critical for new graduates and career changers starting out their new career.
It is now two years since the PY Standard commenced on 1 January 2019, requiring all new entrants to undertake a PY before they are qualified as a financial planner to provide personal financial advice to clients.
As a profession, a majority of planners and practices have been focused on other FASEA standards and their implications. This has meant resolving how the Professional Year program works in a practical sense to allow supervision of new industry entrants across four core areas – technical competence; client care and practice; regulatory compliance and consumer protection; and professionalism and ethics – has taken a back seat.
A new entrant is required to undertake a PY of one-year full-time equivalent of 1600 hours, of which at least 100 hours is to be structured training. To date, approximately 250 new entrants have commenced their PY, with more than 80 passing the exam.
Based on enquiries the FPA receives from new graduates, their main concerns are around the education requirements, the time required to complete the PY and how to find a supervisor or placement.
For students or career changers who are looking to kick off their path onto the PY, we recommend searching for roles such as customer service officer, customer relationship manager, paraplanner or associate adviser. They can then discuss a PY plan with the licensee to formulate how this experience can be recognised towards their required hours.
The FPA strongly supports this rigorous training in furthering the trust in our profession, however, among the professional community we consistently hear that managing the Professional Year is a major hurdle for prospective financial planners as well as a potential disincentive for those considering a career in financial planning.
This is a real concern for the FPA as we recognise the importance of having a strong pipeline of new graduates to take up a career in financial planning, especially to address the affordability challenges of accessing advice.
It is important that the Professional Year is seen as a valuable development opportunity, not just a tick-box requirement. The PY should provide an opportunity to learn and acquire competencies not just on paper but in practice, helping new entrants become well-rounded financial planners skilled at delivering quality, compliant financial advice.
The FPA has developed a comprehensive Professional Year (PY) tool to help licensees, career changers and students alike to simplify and streamline the mandatory documentation processes. Among other things, it offers a tailored PY training plan, mentoring and coaching resources, and automated certificates upon completion of stages. To find out more about the Professional Year tool, contact the FPA Education Team at education@fpa.com.au.
Despite the recent changes announced by government, the robust education, exam and PY requirements are remaining in place. Providing the highest quality PY training now will be the bedrock of sound financial advice in our profession for years to come.
Tips for students, new graduates and career changers considering a pathway to financial planning:
– Read up on what is required to become a financial planner on the FASEA website
– Ensure you are studying or have completed an approved degree
– Figure out your goal – do you want to become a financial planner? If so, put this on the table in an interview and be clear about your intention to complete a PY
– Depending on your experience, expect to work in client admin roles in a practice for a few years before they progress you into a PY – supervision is a significant time and financial investment
– Request from your employer to begin Quarters 1 and 2 while in the final stages of your degree
– Remember that your PY may stretch beyond 12 months if you take it part-time or have to wait between stages
– Partner with a professional association to support you and your supervisor through the PY.
Dante De Gori, chief executive, FPA
The only thing more likely to destroy your mental health than taking on a new entrant in financial planning is being a new entrant into the blackhole that is financial planning. For anyone considering this as a career path, become a lawyer, accountant or anything else you feel qualified to do because financial planning is dead and the FPA are responsible for a few of the stab wounds.
Love the last point…..”Partner with a professional association to support you and your supervisor through the PY”
Nothing like a bit of self interest hey Dante
just like advisers promote themselves. Nothing wrong with that. Be wrong if he didnt actually.
They’re the experts are self promotion. Putting themselves first since 1985.
250 new entrants are not going to replace 10,000 exits between 2021 and 2026. I do agree with the need for new blood though. The FPA has needed new leadership for years.
The industry is a mess and at an all time low! I have advised my kids to seek an alternate career.
Give Dante a bonus this bloke is gold. Pyrite no less!
Dante you are misguided and ideological not practical or results driven. The industry requires much greater certainty and reduced apathy towards advice before private investment in labour can occur, and as technology evolves. Graduate pathways are not a priority, growth in the demand for advice is.. horse before the cart ?
“Read up on what is required to become a financial planner on the FASEA website” . . . yep, smart as usual Dante . . . given FARCE-IA doesn’t exist anymore. What DOES this guy actually do that is in any way meaningful to earn his extortionist salary?
Dante I don’t know how you can sleep at night. please resign. In the FPA’s submission to FASEA you called for the meaning of degree to be a Financial Planning course approved by FPEC. You excluded so many regional Universities, Commerce, Economics and Accounting Degrees and now you’re wondering why new entrants face challenges to the industry.
With more and more firms providing holistic advice due to the compliance and the costs associated with taking on any client, client expectations of what they should get for their money also grows. With manyfirms charging minimum fees of 2 or 3 thousand dollars clients often expect an adviser with some experience to deal with. This conundrum (alongside cost of the process) is undoubtedly a major factor in firms being reluctant to put on young new graduates.
The pathway moving forward is no doubt as this article suggests is to do a couple of years work after graduating from an FP degree program as a customer service manager then progress to paraplanning and finally Senior paraplanner/office manager/compliance and Associate Adviser roles. This then allows firms to put experienced people through the PY year and get immediate results for their efforts. The new advisers would by then have the skills to satisfy client expectations. Universities and Regulators need to get their heads around this process so expectations of ambitious graduates can be managed and processes set up reflecting the reality of this process. Time spent preparing plans for experienced advisers should counted towards experience and transferrable between supervising firms if needed.
“While compliance and affordability may be key challenges for financial planners already in practice” – was not aware that you (Dante) understood this. Your (and the FPA’s) lack of effective lobbying to bring some degree of sensibility to the current plethora of compliance requirements “dumped” on our industry over the past 10 years has been deplorable to put it nicely!!
Where did you get the 250 new entrants number from??
And, all this to promote your PY tool – no mention of cost to access it!!
Do the industry a favour Dante and move on.
Just an ad for the FPA, I guess when they have lost a lot of trust within the industry they need to sell products themselves to make up for the lost memberships.
Good luck with getting many smaller businesses to take on a new adviser getting them through the professional year and then watching them walk to a competitor.