Financial advisers are facing a “pincer movement” from compliance and educational requirements, with “deeply concerning” numbers of advisers leaving the market.
Opening the Association of Financial Advisers (AFA) annual conference, chief executive, Helen Morgan-Banda, said the two forces were causing a negative effect on the industry.
“Advisers are being caught up in a pincer movement on the road to professionalism which needs to be addressed,” Morgan-Banda said.
“On the one hand, there is the ever-increasing compliance burden and associated costs. On the other, is the need to meet further educational requirements by the end of 2025.”
This was having the knock-on effect of causing experienced advisers to leave the industry because they were reluctant to meet the educational requirements, at the same time as fewer graduates were entering.
She said the number of departing advisers was “deeply concerning”, with 1,650 who had passed the Financial Adviser Standards and Ethics Authority (FASEA) having since left the industry.
“Graduates are not being attracted to financial advice as a career. The number of graduates entering the profession each year is tiny,” Morgan-Banda said.
“The professional year as it stands is difficult to sustain for either graduate or employer. Without change, there simply won’t be enough financial advisers to meet demand.”
Morgan-Banda called for a “reset” to the ever-growing regulation which would enable those consumers who sought advice to be able to receive it. Research by the AFA, IOOF and Adviser Ratings had found that Australians who received financial advice experienced higher financial wellbeing, more income in retirement, lower interest payments and enhanced net wealth.
“We need a reset in the regulatory agenda which properly balances the need to protect consumers with the need to reduce unnecessary and unproductive compliance activities so we can offer more Australians affordable, quality, financial advice,” Morgan-Banda said.
“The number of people who need advice is growing – we all need to work together to meet that need.”