The lack of information over how many adviser graduates are attempting or have completed the required Professional Year (PY) has left dealer groups worrying over how many graduates are entering the system.
Stephen Glenfield, Financial Adviser Standards and Ethics Authority (FASEA) chief executive, had confirmed to Money Management that FASEA had processed 68 eligible New Entrant Registrations from licensees.
However, they can’t determine how many had completed it as FASEA only asked for information on the New Entrant form for commencement of their PY.
“There are six provisional financial advisers registered on the Australian Securities and Investment Commission’s (ASIC’s) Financial Adviser Register,” Glenfield said.
“However, this only indicates that they have passed the exam and are authorized by their licensee, not that they have completed their PY.”
An ASIC spokesperson confirmed to Money Management that to date there were only six provisional financial advisers on their register.
According to data from ASIC, there were now under 24,000 currently registered advisers in Australia.
Keith Cullen, Wealth Today managing director, said it had become a worry as he expected business to double in the next 18 months.
“Succession planning is absolutely critical in this industry, you have retiring advisers and an exodus of people from the industry,” Cullen said.
“The PY is one of the pillars of the FASEA program to improve educational standards, but the problem is, I don’t see that it’s workable at all.”
One of Wealth Today’s advisers in Perth had asked if there were any objections to having a graduate on their PY, but the company realised they didn’t have all the frameworks in place.
“We trundled off to FASEA because they always said they’d put in place a framework for licensees for how to monitor and supervise the hours and other requirements,” Cullen said.
“We asked if they could give us a copy of this framework to assist us in putting our own internal one together and they said they hadn’t done it – that was in June last year.”
The PY requirements commenced from 1 January, 2019, as a requirement of the Corporations Act 2001.
All new entrants to the industry were required to undertake it before they would become a qualified financial adviser.
They must complete one-year full-time equivalent work comprising 1,600 hours, which included 100 hours of structured training.
“We raised the issue with colleagues around the industry, I think we got to a count of five [graduate advisers], out of licensees representing 2,500 advisers,” Cullen said.
“If you extrapolate that out to 25,000 advisers in the country, that would equate to 50 people doing their PY, which is not enough of an inflow into the industry.”
Glenfield said PY candidates were still expected to complete their requirements despite the effects of COVID-19, much in the same way businesses were expected to adapt.
“The PY should evolve and adapt to the way its firm is currently doing business with clients, therefore their involvement in client meetings may now be required via telephone or video mediums accessible by its firm,” Glenfield said.