Economics will solve adviser supply issue

Economics will eventually solve the adviser supply issue, but the issue will not solve itself quickly, according to Centrepoint Alliance.

Centrepoint Alliance advice group executive, Paul Cullen, said the adviser supply issue would take time until financial advice became a profession as that would attract people who want to make a career out of it.

“The economics will be there so ultimately the market will respond to that. There will be more people that at advice as being a profession and see it as a career that to aspire to,” he said.

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“But in the short run, it is difficult because there aren’t that many graduates coming out who think that financial advice is the career for them.”

Cullen said there were still advisers “spilling” out of superannuation funds, and banks who were looking for roles and that his firm tried to place those people in their practices.

“That's still a source but once that dries up it will be incumbent on everybody that's left to try and attract, and promote advice as a career,” he said.

“Because in the absence of that is just not going to be that many entering. The UK went through that cycle and that cycle is playing out here now.

“But economics has got a great way of solving things – a free market where people can make a good living, and make a big difference to clients. It's a profession and eventually the economics will solve the supplies issue.”

Cullen noted that there would be lag as even if people today were interested in getting into the industry they would need to complete a relevant degree, sit the Financial Adviser Standards and Ethics Authority (FASEA) exam, and then go through the professional year.

“You've got to get the EQ stuff right, as well as the IQ stuff. And that's just working in a practice and being coached and mentored by a good adviser to be able to deal with clients and do all sorts of work that goes around an office. And so, there's a lag,” he said.

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Obviously doesn't speak to many advisers in his network. We are just trying to survive and anyone interested in becoming an adviser will be politely told to stay away. Would be good if these executives could put their efforts into working with the associations to lobby for urgent changes rather than talking crap.

I believe economics is already influencing the supply issue. As a high school grad you are staring 5+ years of study straight in the eye to become a financial planner: 4 year degree, 1 - 1.5 year professional year (and you need to find someone who'll take you on) plus FASEA and Bridging. And that's assuming you have the high score to get into the studies. This sort of time commitment opens up pretty much every professional career opportunity out there. This isn't about economics, this is about a young person choosing a major time and financial commitment for their future. There's lots of other options.

spot on. and why would you choose financial planning which to be polite is a total and utter mess when you could instead go into law, medicine, engineering, and accounting where you are respected, and the regulator is not trying to destroy you daily

for anyone thinking about entering just stay away, everyone is leaving

Spot on. If you haven't got a business run by a relative or close friend waiting for you to take over, run away.

When I attained my CFP, my father (CFO/CA) said "congratulations, you're now a failed accountant". That was 16 years ago, and still today the same attitude prevails accountants and their thoughts about financial planners. So sad!
Anyway's [email protected]#k the haters! My clients love me, they pay me well, I'm my own boss and my buisness val is 3 times more than any accountants business.

does your father know, the little 'ca' only require a 50% to pass but a CFP requires a 70% to pass. make sure you let him know, otherwise give us his details I'll let him know, have a few more qualifications than him.

tell your old man know it's the other way around now. only the ones who are failed financial planners become accountants. easy to become a CA not difficult. if it weren't so there wouldn't be 200,000 accountants in Australia and only 19,000 registered financial planners.

Damn, buddy! I'm glad my father wasn't such a dick.

he/she should just be glad he/she doesn't suffer from massive depression like his/her father

sounds like your father suffers from a massive inferiority complex and depression. I hope he is getting treatment for his mental illness.

it's probably more like x5 times. an accounting practice usually sells between 0.45c to 0.90c in the dollar for each $1 of revenue. very rarely will you see anything sell around 0.90c, they usually sell for 0.45c.

therein lies one of the biggest reasons for their inferiority complex and cause for depression.

as you can imagine, if you and I were in such a position we'd be seriously depressed too.

your father suffers from massive DEPRESSION. help him!!

Agree with both points - i think all are a little tired of the sermons from the mount who typically haven't actually had their nuts on the line given everything that has happened. IT would be better if they lobbied harder using all their wonderful opinions with govt and regulators...and yes FP as a career will possibly have the same glossy veneer as real estate does...plenty may have a go but then find out the hard way just what a slog it is and give up for something easier and less likely to land you in jail for a simple mistake.

The "free markets" is set by regulations, which dictates what market structures can/cannot exist. The comment that "economics" will solve the issue is distorted from reality, when we know that advisers are being hampered by regulation. In reality, the "demand and supply" curves are not smooth like it looks in textbooks - no wonder economists keeps getting their forecasts wrong, begs to believe why people keep paying them.

Yep! And there will be a post-graduate course for used car salesmen as well!
Then they will be recognised as a profession! Everyone can become part of a profession!
Oh - an influencer, giving advice without qualifications? No problem!
Why go through years of low pay and no pay to become a recognised and certified professional?
Just look at all the advice providers in Dave Ramsey and Barefoot and Families On A Budget!
Taxi drivers, butchers and bakers! A what? Professional year? How many years of education?
Pay for what? FASEA, ASIC, politicians, dealer groups, rely on FFS! Really? I'd rather sell used cars!

actually, these days selling used cars is quite a good profession. cars are mostly very well made and so I think used cars salesman have moved up a lot higher in the rankings than financial planners. I think you can make a good living selling used cars.

there you go another thing young graduates can aspire to than be a financial planner. try asic also there are jobs there you don't have to know anything just waste time and reources on other people's dime of course.

The real irony in these comments is that we can never become a profession so long as groups like his employer remain.

Having a body between the professional and the regulator/standard setter makes no sense - which would be why literally no other profession uses our ridiculous system.

Well, actually, it does make sense to one group of people - the many, many managers and executives staffing this bloated irrelevant middle tier of regulation.

A group with, I would wager, a far higher average income than the average financial adviser.

But yeah, cool comments about economics.

that's exactly right. it is these dealer groups who are holding back the true profession of financial planning. but they won't let us go.

Why would one study for 5+ years to go into an industry that is constantly harangued by the government, an industry where their clients have to take near zero responsibility for their actions, and they - as an adviser - are left on the hook for administrative transgressions which could cost them their entire livelihood? For that amount of study, one could move into a profession with much less personal risk and a higher pay. It's clear why there are so few graduates choosing financial planning as a profession. It makes no sense to do so!

Whilst people are able to put articles such as "client loses money to dodgy adviser" as reported online this weekend, without any pushback from the associations or anyone how are we to gain the publics trust? This is a perfect example of two people apparently professionals kicking us in the guts to get business. The article is a write in question, a person apparently saw a planner 10 years ago who promised to double their money, but this apparently person lost money. This gets reported as fact and leads into comments such as dodgy untrustworthy planners etc. No checking to see if this actually happened or if it was a story dreamt up to get your name in the paper. No we just let it go without so much as a whimper, we need to be out there questioning this stuff. Its very upsetting to see these stories in the media after all the work we are doing, other professions still want to stab us in the back to get business as they know we don't bite back, its time to start holding these people to account. If we put stories in the news about lawyers misspending trust funds and said invest with us instead you don't think the law society would be up us like a rocket? As an aside, when was the last time a dealership rebutted any sort of negative press about us in the mainstream media? Don't others also find this strange that those we are licenced by are so silent in the mainstream media where our detractors do their best work? You wonder why we cant attract new people, people want respect in their roles, they want to be proud to say yes I am an adviser, not to be paid out day after day after day for the sins of the instos with no public rebuttals at all. If we came out swinging once in a while the respect would be earned, the public likes a fighter, they respect that.

the advice profession and the associations could learn a lot from china's wolf warrior diplomats eye for an eye is what is needed.

that is why so many thousands of advisers who did great work are leaving because it's a mental drain every day to see people bagging you everywhere. day after day after day.

just wait until the end of the year, many more thousands will leave. too hard to get up each day and try and do the right thing when you are constantly getting kicked in the head.

i give up.

they are killing us man.

don't worry wildcat is hiring. contact wildcat. he comes on this forum.

An eye for an eye is exactly what will happen at the next election. Hume, Frydenberg and Morrison are too dumb to realise financial planners have been their biggest supporters over many years. Not just with their own votes, but their employees and families, plus we are big influencers. Labor are waking up to this now and it is a great opportunity for them. Heck, they could even keep our votes if they play their cards right. They won't have to do much to win us over considering the level of anger in the adviser community.

Totally. No one in my extended family will be voting for the current Liberal Party frauds.
They solely support Big Business.

It is concerning that Centrepoint is so oblivious to what is happening.
" a free market where people can make a good living, and make a big difference to clients" is a great concept, but this is not happening. It is not a free market; we have a government deliberately imposing punishing taxation rates (fees) on independently aligned advisers with the objective of getting all advice back with the Big Banks and Big super funds. That is their objective. It is why intra-fund advice avoids the #ASICtax and probably the compensation of last resort tax, and will expand in the scope of advice allowed to be provided.

Just another dimwit sitting in his ivory tower talking about something he couldn't care a stuff about. It makes no difference to him as long as he continues to rake in his income.

Economics is code for Tik Tok, Insta, the Barefoot investor et al, and Hesta Call Centre.

tik tok, tik tok, tik tok, KABOOM! then blame a financial planner.

sure, check this out, crim is a tax accountant, but they call him a financial advisor anyway. how do we stamp this out, man? it's killing us.

can everyone please click on the article and email the writer of the article and let him know that only licensed, qualified advisers on the FAR can be called financial advisors.

we need to educate all these idiot journalists.

thanks, everybody.

Is there not somewhere we can report this, since the term financial planner/adviser is now supposed to be a protected terminology? Sure would be a good way to curb the slander if the professional bodies / ASIC offered a way for us to help enforce this at least

if you are a member of the fpa please let them know they are writing to every journalist apparently.

In my next life I am coming back as a lawyer. Based on my previous knowledge and the help of the regulators I will trip up advisers on a technicality and make a fortune. Not a moral issue just need them to make one small mistake.

I'll come back as a public servant. Get paid no matter what, give yourself a payrise in the middle of a pandemic, create ways to lobby for more government funding (to get more guaranteed payrises), produce half-arsed biased reports, and then if there we get into any strife we just blame the private sector.

Nearly 45 years ago, Mum and Dad told me to get a job in the public service, because I would always have a job. How wrong I was not to heed their advice!!!

Young people if you are reading this, here are a few reasons I feel financial advice as a career is a poor choice right now.

Here are some musings.

It seems you will forever pay for the sins of other advisers and institutions who came before you. Many of these advisers and the vast majority of these institutions involved in these sins have left. That doesn’t matter though, you are now a ‘financial adviser’ so you will have your credibility questioned regularly and heavily despite your education, best intent, clean record, fiduciary duty to act in your client’s best interest and adhesion to a professional Code of Ethics.

You’ll have to achieve a high level of education to become an AR just to get started. Once you do get through, there is often little or no career path. The hours are long, your salary is probably quite ordinary. There is plenty of uncertainty around the future of how advice will be provided to the Australian public and how this will be paid for. That is critical to your future and it is still very undecided and continually debated.

The reality is once you finished education, you’ve jumped through a bunch of hoops with quite a high level of opportunity cost (i.e. do something else - time and money) just to get your ticket. Now you're here you get a front row seat to accept this continual uncertainty. Meanwhile your friends in other professions will likely prosper more than you with considerably less stress, deal with less current and future uncertainty and they probably work less hours every week than you do. Don't be surprised if they earn 'a lot' more than you do with comparably little responsibility.

The probability of you getting a pay rise is reduced by continuing increases in costs, mostly from compliance. There is also this levy kicking around that funds compliance and advice litigation…. Seems to have gone up a lot as well.

By becoming a licensed financial adviser, you have agreed to accept huge responsibility and accountability for your actions as an adviser. That is what you would expect from a professional, right? Cool.

Meanwhile you'll look around and see many unlicensed people providing financial advice on the internet or providing general advice which arguably masquerades as personal advice elsewhere such as books, podcasts and internet articles. Regularly you’ll think that this advice is inappropriate and sometimes downright dangerous despite the ‘general advice warnings' provided. No worries… Caveat Emptor they say....

Sadly, creators of this type of content may likely be held in higher esteem within the community than perhaps you ever will. Chances are you'll have many people come to your office or talk to you at a social event asking about some 'unlicensed expert' comment on this or that and if you answer differently you'll probably get challenged you as to why your professional opinion differs to that of the "unlicensed expert".

Sometimes you'll see these 'unlicensed experts' invited on to TV or radio to talk about finance and whilst they are talking, they may speak in a way about what you a licensed adviser in a very 'non encouraging' manner and dissuade the public from potentially seeking your advice. This'll annoy you to no end. It’ll probably make you angry.

Sometimes the stuff that is said about what advisers do is completely untrue… An ‘unlicensed expert’ I heard recently was talking about how advisers often encourage clients to borrow money to buy investments so the adviser can charge a percentage based fee. You know its the way the adviser gets paid. I’m not sure which rock this ‘expert’ lives under but that type of conflicted remuneration was banned ages ago. Nonetheless, these claims go largely unchallenged and promulgation of incorrect information such as this continues to do arguably large damage to the reputation and standing of present day advisers.

When someone who is unlicensed conducts financial fraud, you'll start throwing things at your TV when the reporter announces them as being 'financial adviser'. A week later, you’ll be talking with a client and they’ll ask about this adviser caught conducting in fraud and you’ll have to tell them that they weren’t even an adviser. That’ll probably surprise your client despite records like the FAR existing for all the public to see which journalists should use.

Nonetheless this does continue to happen and you along with the rest of us financial advisers will get tarred with it. Then when a proper licensed adviser gets in trouble, financial advisers as a whole will get tarred with that too.

When it comes to assessing your professional judgement and meeting compliance duty regarding your advice there is an overwhelming focus on the process you went through to provide the advice rather than looking to the outcome for the client. No other 'profession' has this feature…. Advice probably is not a profession yet, despite having professionals in it the fact that approaches like this exist suggests that the industry cannot be trusted and these are required safeguards to minimise risk of inappropriate advice. There is talk about removing this demonstration, but hey that’s not going to happen any time soon. Trusted yet? Perhaps 2030? Maybe 2099? Who knows you know?

A lot of the value of your advice for the client will be strategic in nature. That is solving for 'how' to best get clients from current position A to future position B. Strangely however, there appears to be a great focus on what product you used to get from A to B. I believe product is a small part of the client value proposition.

Sadly, there is almost no focus on the strategy used to get there which I believe is the largest part of the client value proposition. It's likely that no one will ever judge your strategy too closely in the future as most of the focus will probably be just regarding the product.

As your grappling your way through file note after file note and justification after justification of your advice, you'll hear stories about other advisers who aren't having to do what you're doing to provide similar advice. Huh? How?

So next time your there with your clients asking them to sign their 3rd or 4th form to ensure they understand the fees they are paying for your service and are providing informed consent for the fee to be charged, you'll also hear stories about how other advice is paid for from pooled product administration fees. But what - you’re not allowed to do that! Where is the informed consent? Where is the opt-out?

This service might even be advertised as 'access to free advice’. Wow. Many say that the rigor that goes into providing this type of advice is substantively less than the considerations you might undertake...

From there you’ll think to yourself, hey, we’re all licensed financial advisers here and we’re all professionals, right? Shouldn’t we all be tested on our best interest and fiduciary duty to our clients? The answer to that is yes…… isn’t it? Surely.... Oh really.... How is this a level playing field?

There isn’t much love from politicians for being an adviser. Neither parties have clear policy.... I won't talk about potential conflicts, or talk about level playing fields.

Imagine you've been around for a few years advising and in 2020 an event like COVID kicks off and you think to yourself, this is really tough but my clients are paying me to guide them through the storm. So, you do, it's your job to stand up and lead. Information is moving quickly, the days are long, uncertainty huge and volatility is enormous. You spend a lot of time checking in with clients and encouraging them not to change their investment strategy so to avoid financial detriment to themselves in the long term.

You also help them through tricky times personally, loss of job, large uncertainty, stresses both personal and on their relationships, poor mental health and you alleviate some of the pressures they are feeling. The clients thank you for your efforts and feel better for having spoken to you. You feel good that your making a difference and helping them through.

You think that this might be a time where consumers are getting great value from advice and you might get some support from consumer advocates for doing a good job. Advisers are doing good things. Then you read commentary from a consumer advocacy group which was not particularly complimentary about advisers putting a client’s best interests first right in the thick of when the Australian public was grappling with COVID.

Your think to yourself…. What do I have to do here…? What did I do to deserve that? Seriously….? I'm here to help. Yeah, thanks. Much appreciated. Righto. At least some financial advice industry associations came out and said something.

Here's the article:

In the meanwhile it is reported that many within the Australian public who didn’t have financial advisers decided during the COVID turmoil to change their investment strategy. They likely did enormous amounts of future detriment to themselves from undertaking these investment switches, particularly those who went fully to cash.

Was there much attention drawn to this? How may these switches could potentially been avoided to get better outcomes for Australian’s?

Hmm… A reasonable person might believe the quantum of the switch damage would well surpass the damage of financial advisers inappropriately charging a fee regarding COVID withdrawal advice?

I'd think the effect of this could be measured in many billions dollars to the overall outcome of the Australian public…. But oh well. Move on.

When it comes to ongoing service, you get to know your clients well and will genuinely care for them. You aspire to provide a very good quality on-going advice relationship. You think, great! You get this nice feeling knowing that you’re doing a good job and the clients see value in the service that you get up every morning to provide. Tomorrow you’ll again read that the service your providing is described as a rip-off, that it doesn’t add much value and costs too much.

It feels like there is no framework anywhere at all that captures the abstract benefits clients receive from an ongoing advice relationship. This isn't exhaustive but things like having confidence in decision making, using effective strategies to optimise outcomes, access to someone who understands your circumstances and has a duty to act in your best interest means better health from less stress, better spousal/family relationships, prevention of poor decision making…… you name it there is stack of unquantifiable value embedded and it varies from client to client….. I feel the Australian public benefits from this service, but I know it's not for everyone.

The problem is, no one seems to reach out your clients and ask what value they get and why they are happy to continue to pay for their financial advice. This is despite them renewing their relationship with you by 'informed consent' every 12 months and signing a ridiculous amount of forms for that to occur. Oh yeah, they can opt-out at any time if they don't see value. If your charging them for a service you don't believe demonstrates value, then you too as the adviser may elect to suspend providing service.

A reasonable person might think that the Australian public who receives financial advice are suitably qualified to make their own determination of value as to how they spend their money? It's their call how they see value right? It seems not given what I’ve read and experienced. There are many opinion pieces and submissions which vehemently disagree with what my clients say and do. You should have a read of some of the submissions in Round 2 and 5 to the Royal Commission in 2018. That'll give you an idea. I don't think much has changed.

I feel as that I some of these people genuinely believe that I sit here with my feet on the desk all day, clipping the ticket and making a motza from ripping off my clients whilst providing little demonstrable value.

But hang on…. I thought adhesion to the FASEA Code of Ethics makes advisers accountable to considerations regarding client fees charged for services….? You know, commensurate in value the service being provided, demonstrating value for money to the client. That stuff.... Oh yes.

So why is it that the value of ongoing advice relationships and how this are paid for continues to be vigorously challenged? You’ll have the palm of your hand in your forehead reading the opinion about what some outsiders believe advisers do, what value advisers create, what and how advisers should charge….

So there you go, feeling good about advice yet? If not, let me say that pretty much all the news you read regarding advice will be somewhat depressing, frustrating and annoying. You want things to be different. You don't want to be trapped in advice because you've come this far but that can happen, like any career choice.

There will probably be glimmers from time to time showing a future which matches the expectations of what you thought advice could and should be. That might just be enough to keep you going. So might alcohol.

Financial advisers have some of the worst mental health and overall well-being statistics of any career in Australia at the moment and this is well documented. That is not going to change anytime soon either by the looks of things.

I’m still here because I genuinely believe that I’m making my patch of Australia a better place and that there is value from the advice that I provide. In a sick way, I’m normalised to the turmoil of being and adviser because I have never seen it any different.

My advice though doesn’t change. It saddens me to say this because I wish I could endorse the profession.... but for now...

Young people - go and do something else!

It's a shame so many practitioners are negative about the future of financial planning as a career. Such a high level of job dissatisfaction goes to show how poorly equipped so many planners are to remain in the industry. I have been in this industry for 20 years and cannot think of a better profession. Financial planning is a complex business and assisting clients provides a great deal of satisfaction. Being self employed provides a massive amount of lifestyle flexibility and a well run business will provide a 40% EBIT on top of a notional salary, which can easily provide a financial reward in line with successful lawyers / doctors (well in excess of $250k pa) The industry and regulatory changes we are currently undergoing were well known for many years and people chose to ignore the need to do the necessary study, pass a once off exam, stop relying on commissions for revenue, engage clients with an annual fee agreement, move to a licensing arrangement that was not tied to product distribution etc etc. All very simple things to do if you had a 5 year plan, but suddenly there is a mass exodus because it is all too difficult to make the all necessary changes in one go. My business model and administrative process has not changed much at all in the last few years and I have never been busier with new clients coming on board. It is going to be a great decade ahead for those that remain in the industry.

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