The number of advisers doing their professional year (PY) in the industry is currently not enough to sustain the loss of adviser numbers, as adviser exits outnumber entrants more than 10 to one.
In the Financial Adviser Standards and Ethics Authority’s (FASEA’s) opening statement to the Senate Estimates Economics Legislation Committee, it was mentioned that “close” to 200 new entrants were doing their PY.
However, the latest data from HFS Consulting in October showed the net loss of adviser roles on the Financial Adviser Register (FAR) was 2,433 so far this year.
The PY requirements commenced from 1 January, 2019, as a requirement of the Corporations Act 2001 and was a requirement to becoming a qualified financial adviser.
It comprised a year of full-time equivalent work of 1,600 hours, which included 100 hours of structured training.
Keith Cullen, Wealth Today managing director, said they had one new PY member but it was an existing staff member.
“It’s an existing staff member that’s been with one of our adviser’s practices for a few years,” Cullen said.
“We’ve probably had a dozen advisers exist the industry ourselves over the last 12 months that were either people semi-retired that have decided it was too hard or they had a small practice that was an adjunct to an account or mortgage practice and decided it was too hard.”
However, Cullen said the current exodus may not necessarily be an issue as a fewer number of advisers could be enough for the industry.
“Let’s say the appropriate number of advisers for Australia is 12,000 to 15,000, not the 20,000 plus that it got to… the natural course is that you’re going to need 1,500 [new entrants] a year,” Cullen said.
According to FASEA’s opening statement, almost 50% of advisers had passed the exam, which equated to approximately 10,000 advisers.
There were also six exams to be held in 2021, as well as the results pending from the October and November exams.
The average number of advisers who sat each exam was around 1,600, with an average pass rate of 84%, which meant another 10,000 could pass based on the current trends before the 2022 deadline.