On the latest episode of the ifa Show podcast, adviser and founder of digital solution Scientiam, Nigel Baker said the demand for advice isn’t slowing down despite the number of advisers in Australia dropping below 19,000 late last year, and is predicted to reach 13,000 by the end of 2023.
Mr Baker said the businesses he speaks with are “flat out” but that the real challenge is attracting new talent and advisers into the sector.
“We’ve got this real gap of people who just haven’t been in the industry and fair enough. For the last 10 years, why would you join an industry that’s been bashed around?” Mr Baker said.
“You’ve got graduates coming out of uni going: ‘I don’t want to be a financial planner. That doesn’t sound much fun.’ Then the regulations are really quite tight in terms of bringing graduates into the system. They’ve brought in all the new educational requirements, but it’s almost too specific. It needs to be a little bit broader… anyone I believe who’s got a [bachelor of commerce]… or they’ve had their three or four years at uni, we should be encouraging them to come into the industry.”
“At the moment, it’s like, if you didn’t do this subject at uni, you can’t come in. So, that’s limiting the funnel.”
Mr Baker’s comments come after financial services minister Stephen Jones announced that a consultation paper will be developed on education standards and the adviser exam.
Last week, Mr Jones said the government would look at options to “streamline the education requirements for financial advisers” and addressed the 30 September deadline for existing advisers to pass the exam and continue to provide financial advice, saying that following the deadline, he will ask Treasury to explore how the exam can be improved, such as reducing the number of questions.
The announcement was met by a mixed reaction from industry stakeholders.
On the same episode, Mr Baker said the “shake-up” of the industry has called for a new regulatory framework; one that supports and emboldens advisers.
“It would be great to have a future of the industry where there’s more trust, I suppose,” Mr Baker said.
“The regulators trust the industry and say: ‘You’ve got to be able to help more people. Some people don’t need full advice and some people do and we’re going to trust the advisory industry to better work that out.’ Just like, if you’re a doctor, you can say: ‘You’ve got a headache, go back to the chemist.'”
Listen to the full episode with Mr Baker here.
“A consultation paper will be developed” . . . well, isn’t that wonderful – “consultation” and “developed” are just SUCH comfort-giving words, aren’t they?! Then, another 18 months or longer, all the politicians and special interest groups will sit around drinking tea to ‘discuss’ it all. By then we’ll have 12,000 advisers left (of which only 1000 or less will be pure risk advisers) and they’ll find yet another study needs to be done on ‘something’.
Forgive me, but I hold VERY little hope of new entrants entering in any numbers large enough to make any difference. It may have been different if all those older advisers capable of quality mentoring hadn’t been pushed from the industry with punitive exams designed to alienate them.
After 2026 we will be lucky to have anywhere near 10,000 ‘advisers’ of which any substantial number won’t be independent and easily less than 1000 pure risk advisers. God knows how the insurance companies will cope. I strongly suspect they won’t. I do hope their stat funds are healthy, they’re definitely going to need them – bigtime.
You’re far too optimistic?
Reckon there’ll be less than 6000 advisers, ZERO of whom will be in Life insurance….
There is no logical reason why you would become a financial planner at the moment.
Morrison, Frydenberg, Hume & O’Dwyer were an absolute disaster for advisers and had little to no emotional intelligence around the
unnecessary pain & suffering they inflicted.
For a Liberal Govt in a free market economy, I have never witnessed such a sustained and unrelenting discriminatory pursuit of a single industry.
If they were the Govt for small business then all they have done in relation to financial services is destroy it and destroy lives with it.
The FASEA exam needs to undertake through a University, the exam is too long and the pass mark changes at each sitting. Following the exam, it should be provided upon request either pass or fail. Most of the financial advisers’ time is spent on compliance and repeated information, such as fee discloser etc…
Every person that tells me that want to be a financial adviser, I quickly tell them that they need their head read, and steer well clear.
There needs to be a mechanism, as there used to be, to allow licensees to authorise staff they feel have the ability to do the job and have met the education requirements. The professional year is a joke and needs to be scrapped.
Making an exam easier is pointless if there is no one to sit it. Here is the choice as it stands for a new entrant. Become a financial planner where you work in an environment of fear where your advice is questioned and has to be proven through a massive amount of useless documentation, that will be used against you by complaint bodies and regulators to fine and ban you, regardless if the client is happy or not. Or become an accountant and provide the same advice without any need to put it in writing, and if something goes wrong simply say you didn’t give any advice. Until there is a level playing field no one in there right mind would become a financial planner and for good reason.
There is nothing stopping practices hiring commerce graduates. They aren’t going to be sitting in front of client straight out of UniBanyway unless they are going to flog insurance they need several years of development anyway so plenty of time to add a Masters of Financial planning while they are performing other important roles in practices. We currently have five staff doing this with Finance degrees, Commerce degrees, Business degrees. In time they become great advisers and just as quick as those who turn up with financial planning degrees! .
Why are you forcing your commerce graduates to do a Masters of Financial Planning when they only need a Grad Dip? Surely it’s in their interest and yours to put them on PY as soon as they qualify for the Grad Dip? If you are forcing them to spend time and money on another 4 subjects for a Masters I suspect they will be looking elsewhere the moment they qualify for their Grad Dip.
There seems to be a misperception amongst planners who have never done a degree before that a Masters is now the defacto standard. And maybe it should be for those with no previous university education. But for those who have already completed other degrees, a Masters of Financial Planning is meh.
I was a Libs voter for years but after seeing their sustained attacks on our industry I will never vote for them again.
It wouldn’t have mattered which party was in because a government acts on the advice of various regulatory bodies and do you remember the Royal Commission? A RC that uncovered the faults and failures that we we all knew were in the industry but didn’t want to own up to. Can any adviser put their hand on their heart and say the industry didn’t need a major shakeup? te truly good advisers and advisory businesses will flourish in this new environment.
The changes, new regs etc that the vast number of advisers have embraced are starting to make this an industry that quality educated customer focussed people will want to join. Just have a “good customer relationship”, which a lot of advisers believe is their ticket to unsubstantiated on-going advice fees, never meant that the client was getting the most appropriate advice – we needed better uniform qualifications.
More Advice will be delivered by product providers with employed staff recommending in house products – your have been hoodwinked out of the market.
How did the Liberal Party contribute to the design of entry requirements into this industry? ….The last I checked the FPA made a submission to FASEA saying the minimum entry standard should be a Bachelor of Financial Planning, with FASEA saying the industry representative has spoken…. I suggest what we’ve got is corruption within ASIC and Treasury and parties with conflicted interests representing you.
Second that – and taking liberal votes with me – never thought I could be that motivated.