The Government and the financial advice industry need to work together to find a solution for an impending problem – the lack of new entrants.
While we know that financial adviser numbers have been steadily dropping over the last few years thanks to regulation and increased red tape, the full extent of this will not be felt until 2026. In 2026 financial advisers who do not have a Financial Adviser Standards and Ethics Authority (FASEA) approved degree qualification will be unable to continue as advisers.
Some advisers, of course, have already passed the FASEA exam but only intend to stay on as advisers until 2026 as they do not want to go through a degree.
It’s also no secret that the advice gap is growing and Australians are increasingly in need of financial advice.
In the past, like any other industry, the advice industry relied on new entrants to continue the profession.
However, now it has two problems – the advice profession isn’t enticing enough to encourage people to join given the regulatory burden and the professional year (PY) itself is an extra compliance burden on advisory firms.
The time commitment, investment, checks, and supervising requirements means the PY year has been deemed by some as offering “limited value” to advice practices.
If this is the case then the industry is at an impasse – it needs new entrants but finds the process of having PY advisers a compliance burden for them.
The Government and industry need to work together to solve this issue to make the compliance and process easier for practices to take on PY advisers.
Otherwise, come 2026 the number of unadvised Australians will only exponentially grow despite so many desperately needing advice.