Providing well developed professional year programs and offering flexible working arrangements are two key drivers leading to higher retention of new advice entrants.
Last week, Wealth Data analysis discovered that the number of new entrants in the advice profession who departed in the first three quarters of this year has seen an improvement from the amount that left in 2023.
Approximately 10 per cent of the new advisers who joined last year have since ceased from the financial advisers register. In comparison, this figure has fallen to just over 1 per cent in 2024.
The reduction indicates that advice firms are taking greater steps to retain their recent hires.
In conversation with Money Management, Andrew Dunbar, director and senior financial adviser at Apt Wealth Partners, believes this is due to advice practices having better perfected their professional year (PY) programs and the support they offer to graduates.
The PY requirement was first introduced on 1 January 2019, with the intention to raise educational and ethical standards of the advice profession.
ASIC requires PY candidates to undergo 1,600 hours of training to become a fully qualified adviser. The process includes client observations under a supporting supervisor, supervised client engagement and advice preparation, as well as eventually completing the adviser exam.
“When the new education requirements and PY requirement was introduced, candidates faced an arduous few years of hard work and at the same time, advice firms had to develop the systems, processes and supervision to deliver the PY program,” Dunbar said.
It is not uncommon for new regulatory requirements to take several years for an industry to perfect, he noted.
The improvement in the percentage of ceasing new entrants likely represents the profession’s evolution over recent years in adapting and enhancing their PY programs, Dunbar explained.
“Now that we’ve all had some time to develop these programs (and I’m sure many firms continue to perfect them), hopefully this is helping give PY candidates a better preparation, deeper skills, and an improved understanding of the role of adviser and the life full of satisfaction that the hard work brings,” the director added.
“At Apt Wealth, we were fortunate to be able to invest in this program early in the piece, and as a result have retained 100 per cent of our PY graduates. We continue to believe in developing talent from within and have seen the incredible benefits of having PY graduates be trained the right way and then thrive in taking on client relationships.”
Also weighing in on the discussion, Robert Rich, director and financial adviser at Unite Wealth, identified flexible working environments as another reason why advice practices are seeing greater retention of their younger staff.
“Workplaces are becoming more in tune with the younger demographic. Millennials and Gen Zs are almost requiring or insisting on having more flexible working arrangements they can operate from,” he described to Money Management.
“I feel the industry is becoming a lot more modern and not set with the way things have always been done. [Advice practices] are really adapting and thinking: ‘How can we stay on our toes and continue to operate in this ever-changing environment?’”
Companies that fail to prioritise what is important to its younger staff and PY candidates may be left wondering why they struggle to retain quality people, Rich added.
Earlier this year, Dunbar emphasised why it is crucial for advice businesses to invest in their PY programs to organically grow talent amid the persistent adviser shortage.
“This process is about making them a great adviser, not just ticking the box and getting the adviser title. You actually need to put in the development work, do the proper learning, and be patient to reap the real rewards of becoming a far more successful adviser over the long run,” he told Money Management in March.
Moreover, ASIC recently conducted a progress check to see how its Australian financial services licensees are implementing training programs for provisional advisers.
The regulator found that the licensees involved reported a positive experience of supporting a provisional relevant provider through their PY.
“Some listed the benefits as supporting and assisting with their succession planning, and appreciated that they could mentor and train a provisional relevant provider from within the business rather than hiring an external adviser,” the regulator stated.
