Dealer groups uncertain on amount of Professional Year participants

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.

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“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.”

Wealth Today currently had zero people doing their PY and Cullen said he was unaware of any dealer groups hiring significant numbers.

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.

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FASEA is a joke, and is the perfect example where people with no real life experience design something based on ideology instead of practical use. The simple fact is FASEA and the education standards are pushing a huge number of good advisers out the door, while making it near impossible for new entrants to replace them, while giving no guidance on the frameworks they created. Clearly this leaves clients in a worse position, something FASEA has shown little regard for. Soon FASEA will be forced to talk about unintended consequences which is bureaucrat speak for a failure. Advisers will say I told you so and the pen pushers and consultants will all move off to other industries to do the same.

The reason no one is going through all the hurdles to become a financial adviser is because its no longer viable to be a financial adviser. Everyone other than financial advisers is able to give financial advice and charge the client directly for it. Super/insurance sales reps working for the product provider are able to do exactly what financial advisers do, however they dont have to waste hours on paperwork which is never even read by the client and dont have to do a fact find or act in the best interests of anyone but themselves. A car salesman is allowed to sell income protection/life insurance, a realestate agent is able to reccomend SMSF's, an off the plan property sales man is able to commit people to a 30 year fiancial committment with the stroke of a pen, however is a financial adviser wants to increase a client's life insurance we have to spend 2 hours on a statement of advice and ensure its in the best interests of our client.

stop being an accredited adviser. Get rid of your dealer groups, get rid of the Profssional Indemnity insurance, say good bye to pointless paperwork and do what EVERYONE ELSE IN THE COMMUNITY IS DOING which is give financial advice but without the restrictions placed on us by people with vested interests.

"According to data from ASIC, there were now under 24,000 currently registered advisers in Australia." How realistic is this statistic?

ASIC, realistic?
Looks like the model of Intra Fund Advice is working well with many members moving to cash. Hedware, how are all those unlisted assets within Industry Super going? Additionally, now is a good time for you to have a closer look at the % of growth assets held by Industry SUper - I'll give you a hint, it's very high. I guess Karen Chester can always jump back into her previous roles relating to Infrastructure - after all, she seems to be a big believer. Not entirely sure I would like to follow her recommendations for Super with the "Ten of the best of the best sir" or did I get that quote from a Men in Black movie?

I was wondering whether the 24,000 financial advisors was realistic - that is it that the total number of financial advisers in Australia?

It is likely the high tide mark - anyone who could would have been on the register for 1-1-2019. All down hill from here - and on and upwards for Intra Fund phone jockies.

Your first question was how many "registered" financial advisers there were. That's pretty easy to verify by the number of people listed on ASIC's Financial Adviser Register (FAR).

Your second question relates to the total number of financial advisers in Australia. Well, on top of the 24,000 who are registered and operate under a strict regulatory framework, there are also hundreds of thousands of accountants, real estate agents, call centre staff, content writers, mortgage brokers etc etc who give financial advice.

This latter group generally don't have appropriate training, and provide no legal protection for the consumer. They are not subject to any sort of Best Interest Duty or conflict of interest restrictions. They provide minimal if any disclosure. Yet it is these untrained, unlicensed financial advice providers our regulators and politicians are trying to herd people towards, by making it too complicated and expensive to engage a registered adviser.

Thanks for the information. If 24,000 is a peak figure then there are less than I assumed.

It is because of the latter group that I would like to see the former group have the standing to show that they are the professional financial advice people and are the go-to people (and not those in the latter group). That's why the moves to strengthen the qualification standards and the certification requirements should work in the long run if consistency and commitment is a given. The body of professional advisors need to get to and tell the message the the key role and important value of financial advisors to the 'general public'. But this messaging is missing in action. The two bodies supposedly representing financial advisors are also missing in action.

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