Some of Australia’s largest remaining financial services groups are facing a looming degree deficit among financial advisers, according to an analysis conduced by HFS Consulting director, Colin Williams.
Williams has conducted an analysis of the current state of the financial advice industry utilising the Australian Securities and Investments Commission (ASIC) adviser register and has pointed to particular problems for AMP Financial Planning, Charter, GWM (MLC) and Synchron.
He said that all these firms had a low ratio of degree qualified advisers and that those with degrees had far less experience than those without a degree.
Williams said all this was happening amid the continuing exodus of older, experienced advisers from the industry.
According to the analysis while just over half of remaining financial advisers hold a degree, they are seriously lacking in experience when compared to those headed for the exit.
It found that among the self-employed peer grow of advisers 50.83% held a degree but that that their average years of experience stood at 11 compared to those without a degree who boasted an average 16 years’ experience.
“When looking at the total years of experience, advisers without a degree make up 58.97% of this total,” William’s analysis said. “This indicates that there will be continuous change in this sector, to allow degree qualified advisers to take up more responsibility as the older, non-degree advisers exit the market.”
Williams said that for the large financial planning groups with low numbers of degree-qualified advisers succession planning would become vital to long-term success.
His analysis suggested that there were 8,413 “resignations” from the industry in 2019 representing 30% of all adviser roles at the start of 2019.
Comments
Still have 2/3 of the Industry to get through the FASEA exam before anyone worries about the qualifications issue.
Focus on the second hurdle and you might trip on the first.
why is this of any surprise to anyone. Nearly all advisers over age 55 that I know without a degree intend to leave.
My observations from 40 years industry experience during which I spent 10 years doing night school to obtain Degrees in Accounting, Commercial Law and Diploma's in Finance and Financial Planning:-
1/. some of the best Bankers I ever came across did NOT have a University Degree....they had a Degree from the University of Life, Years of Hard Work, Job Specific Training, Experience and Hard Knocks
2/. some of the best Advisers I ever came across did NOT have a University Degree....they had a Degree from the University of Life, Years of Hard Work, Job Specific Training, Experience and Hard Knocks....plus Diploma's the Government Regulators OF THE DAY required Advisers to have
3/. Some of the dumbest Bankers and Advisers I ever came across, had multiple degrees, limited common sense, limited logic and basically talked out of a university text book
4/. A Degree means you are well educated.....but not necessarily clever
5/. The individual demonstrates ability.....a Degree Certificate does not
6/. Academic ability is one thing....practical application is another
7/. Australia is sadly about to loose a massive raft of well experienced, high quality non-Degree Advisers......because a Public Servant, Lawyer and/or Bureaucrat suggested that non-Degree advisers are not good enough or not smart enough or not fit for the job
8/. Things are not always as they seem
Just sayin'
Sadly, you are demonstrating far too much common sense.
Couldn't agree more, however the legislative requirements take none of this into account and it is has been made a requirement that to practice in our profession in the future you will have to have a relevant degree.
I don't know an accountant, GP or Surgeon who doesn't have a degree, so if we want the end goal to be recognised as a profession along side others, then it is a step that needs to take place. From there, we will have advisers who are clever, who have practical application and demonstrates ability, and will have some that do not. Those advisers will thrive in the new world of financial planning, while those that don't have those skills might not. That's like any profession....
At least under the new rules we will have a minimum standard that all have met, so the client can at least be assured that whoever they go see has at least met those educational and ethical requirements. It will then be their call whether the adviser they see has the practical application and common sense to apply it all.
Totally agree Nic. A Bachelor of Financial Planning degree should have been required decades ago.......but that degree didn't exist until recently.
Accounting didn't use to require a degree, and when it was changed so that they were required to have one, existing experienced accountants weren't forced to go back to Uni. My father practiced as a very experienced, successful and well respected Chartered Accountant for over 40 years without a degree.
Forcing experienced advisers to go to University to keep their careers was only intended to drive many out
Still plenty of accountants out there with no degree … maybe they cannot start as an accountant now without one but I don't see any push to kick out these non degree accountants or force them to get a degree to stay in business. So why different rues for FPS?
Yes, not many aware of that for CA and CPA.
Post the FASEA exam this is still a vague possibility for Advisers.
there are about 20,000 accountants across the three major professional accounting bodies in Australia, CA, CPA, and IPA who were grandfathered and do not have a degree.
they were just fine until fasea caught them out, now they are having to do a graduate diploma in financial planning to give advice.
Loves it
the TPB is onto these slackers. TPB is doing a review into whether they should be lifting the minimum education standards.
I have been pestering them with submission after submission with the end goal being, squeezing out the "accountants" who have neither a degree in accounting or taxation or financial planning out of the taxation and financial planning arena (am doing the job of the FPA and AFA, thank you).
this will create more opportunities for licensed and qualified financial planners.
we need to keep pushing accountants out of the financial advice and taxation profession and for higher qualified FP's to take over. these numbnuts have had plenty of time since Luca Pacioli, it's now high time we take over.
best,
bobby
that's correct, you cannot become a Qualified Accountant in Australia now, without going through the three major accounting bodies (CA, CPA, IPA) without having a recognized degree and 3 years of the practical mentoring experience. these standards are set by the International Accounting Education Board which is within the fold of the International Federation of Accountants - the mothership of all major accounting bodies around the world of which all three major accounting bodies in Australia belong to.
listed In order of most preferred and least expensive
CPA - offers their own internal program without an AQF designation though recognized widely as a graduate diploma level (AQF 8) cheapest, shortest, non-AQF, most popular, most members of all three bodies
CA - offers a graduate diploma at AQF 8 and;
IPA - offers an internal program for stage 1 delivered through Deakin Uni and a masters degree (MBA) (if you complete stage 2 of their program ) at AQF 9 also delivered in conjunction with Deakin Uni, hardest level, longest, most expensive
The lack of a minimum degree was a source of ridicule from the media. It needed to be addressed. Kelly O'Dwyer did the right thing by developing FASEA and passing the education reforms. Unfortunately she chose the wrong people for the board. They were supposed to take experience into account with the education standards, but they completely ignored it. They could have easily ruled that 10 years of experience and CPD points, combined with a diploma of financial services was equivalent to a degree. Many universities allow those with specific industry experience to enter a post graduate course without an undergraduate degree, so there is a precedent. Unfortunately those in power at FASEA decided that causing maximum carnage would make them look tough and it would be better on their CV than helping to support us and allowing our profession to flourish. Every single standard they have implemented is designed to make the board look tough. They have no interest in our profession. They have no interest in helping consumers to access affordable advice. Their FASEA board appointment is just a short paragraph in their CV, which builds their profile for future Government and board appointments.
I think you hit the nail on the head. But instead of using the word flourish I would suggest that they failed to allow the industry to transition to a profession.
One of the Big 4 banks had a CEO with a degree in History and classics … so he could oversee a massive network of planners and a huge bank but could not work as a planner... no relevant qualification for planning or banking ,,, but ASIC couldn't give a stuff about CEO quals..
Changes to RG105 (AFS Licensing: Organisational Competence) and Responsible Manager requirements are coming. Pretty much if you don't meet the same standards as an Adviser you are gone.
Your observations are right on the money RR. A degree only shows that you can learn. It doesn't mean that you can you put that learning into any practical form. The University of Life really is the only great teacher of Advisers.
Don’t know what the big fuss is about 2 senior advisors have done a graduate certificate in financial planning it didn’t take them that long because they were granted so many credits because they are members of CFP, have an advanced diploma of financial planning and other credits. When you are required to only do 3-4 subjects in a degree that consists of 8 that is not hard at all. Advisors still have plenty of time to complete it, I am doing my Graduate Diploma I have to do full 8 subjects just doing them 1 semester at a time it’s a pain but it’s what needs to be done I’m not whinging about it
you missed the point. how old are you? and how many years of practice in financial planning?
Nathan, many numbers.... I never whinged when I was thirty years plus younger either. I craved education and did everything that I could find. To me, knowledge was power. But as RR eloquently puts it "The University of Life" is your best learning. I learned that as my hair greyed and started to disappear completely. You cannot put a wise head on young shoulders. Remember that quote in twenty or thirty years time, when younger people start with "Ok Boomer" or whatever your buzz title will be and they are killing your mental health with their new requirements.
During the halcyon days of financial planning, Money Management use to do double-page spreads on the adviser numbers at all the major dealer groups. The bigger the better back then, and it seemed the low hurdle to joining the profession was a huge benefit enabling them to continuously bolster numbers in what was really only a glorified salespersons job! Now that its has become mandatory to achieve the traditional and acceptable entry route into a professional industry it appears all hell is breaking loose. The above story suggests there is only a 5-year practising gap between practical experience and degree qualification. 11 years for a degree and 16 years for non-degree participants. This would become a genuine newsworthy item if the gap was far, far wider but it's not.
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