Fixing the PY pipeline: Addressing the challenge for licensees

Stakeholders in the professional year (PY) discussion underscore the challenges in the current pipeline and what is holding back licensees from taking on new candidates.

Since the Hayne royal commission in 2019, the advice profession has almost halved, plummeting from 27,959 to 15,364 as at 31 July 2025, according to a Wealth Data analysis. 

In 2024, some 511 advisers joined the profession as new entrants, with most being hired by Entireti, Count and WT Financial, but this is insufficient to make up the industry losses sustained in earlier years. 

While there are several factors that have contributed to the flailing recovery, from the higher education requirement to the lack of public awareness for the profession, new entrants said that a key challenge is the PY and finding a licensee that is willing to take them on. 

The PY is a legal requirement for new entrants to the advice profession, intended to be one full-time year or the equivalent of 1,600 hours including 100 hours of structured training.

But the heavy workload for both the adviser and the candidate and associated supervisory regulatory risk for the adviser means licensees are hesitant to take on candidates. While this may once have been the domain of major licensees, such as AMP and Insignia, the evolution of the industry into smaller players means graduates can no longer rely on the big firms for their headstart. 

Although large firms such as Count, Morgans, Entireti and Viridian Advisory have established PY programs, there are calls for smaller licensees to also step up and take on candidates. 

Financial Advice Association Australia (FAAA) general manager of education, Anne Palmer, said: “It is easier for enormous organisations to put on big programs, but they shouldn’t be doing that as a responsibility. Saying somebody should do something because it’s a responsibility doesn’t necessarily give the right outcome. 

“The profession should do it organically when there’s a need for it, when it works, and when it’s right for everybody.”

She said the FAAA is actively working on initiatives to help licensees of all sizes get PY programs up and running which will be announced in the coming months. 

The business perspective 

Jordan Vaka, owner and financial adviser of PlanningSolo in Melbourne, said cost is the biggest factor preventing him from taking on a PY candidate. In the early stages, the candidate isn’t generating any revenue for the business but still requires a salary as well as taking time away from the advisers’ own revenue-generating tasks.

Paying the salary of an adviser is often an unwanted expense when advice firms are already paying numerous regulatory levies, plus the general fees and costs associated with running a business, he said.

Operating an advice business in Australia has become an expensive endeavour in recent years, with the cost to serve per client sitting at $4,000–$4,500 on average, according to Wealth Data.

With this in mind, Vaka estimated a business should be operating at a profit margin of 40 per cent or more to make the risk and cost of taking on a PY candidate worthwhile. 

“If you’re not running at that, you don’t have the money to make those investments.”

On top of this, there is the added regulatory risk to consider when bringing on a PY, particularly as a self-licensed practice.

A prime example of this risk was seen in July when Ian Wailes Potter, a financial adviser and PY supervisor at Superannuation Advice Australia, received a five-year ban after ASIC found inappropriate advice was provided by his provisional relevant provider. As Potter had been nominated as his supervisor, ASIC found his supervision was inadequate and he was liable for the incorrect advice provided. 

There is also the worry that a firm will spend a large amount of time training up a PY, only for them to leave for a new firm once the process is complete, but commentators previously shared how demonstrating the firm’s value proposition and long-term career plans can help to cease these departures.

When it comes to who will take on the training of PYs in the future, Vaka suggested it will fall on two kinds of businesses: family businesses and profitable advisory groups. 

“I think the biggest group will be the most profitable advisory groups that can afford that cost and have a good flow of new business because they need the people to help them. If you’re unprofitable, or if you’re pricing ineffectively, it is going to be really hard to bring on a PY.

“The other group is people that have a family connection to the PY.”

The PY perspective

Jackson Raddysh, a Q4 provisional financial adviser at Prime Advisory in Sydney, said he finished university with the “haughty expectation” that he would be able to jump straight into a PY role. He very quickly realised that isn’t how the profession operates and he would instead have to take up an associate or paraplanner role first. 

Once he realised he was going about it the wrong way, Raddysh switched tactics leading him to secure an associate role in 2022. Accepting that he would have to work his way up from the bottom, he made sure to clearly express his intentions of pursuing a PY role in the future so he could work with the firm to lay a path forward for him.

“For me, it started with setting expectations early. Before I even joined the company, when I was interviewing, I signalled that intention. Moving forward, I understand it’s going to be a bit of a process, but I was clear that ‘I want to become a financial adviser over time, and I want to be supported through that process.’”

The FAAA's Palmer agreed candidates should seek out client services or paraplanning positions to build up experience and allow them to prove they are worth the investment. They could then bring up the possibility of doing a PY in the job interview to determine if the firm would be willing to make that future investment in them.

The first quarter of the PY largely entails the candidate shadowing their supervisor in client meetings, completing post-meeting documentation, undertaking follow-up actions, discussing appropriate advice strategies with the supervisor, and actively participating in administration and back-office activities.

Quarter two involves more hands-on experience while being directly overseen by their supervisor. Candidates should be preparing for and conducting client meetings, preparing draft documentation including advice strategies and statements of advice (SOA), while still continuing back-office duties. At this point, candidates are required to have successfully passed the adviser exam in order to move onto Q3. 

In the final two quarters, candidates operate under limited or indirect oversight from their supervisor, creating model strategies and researching products to determine suitability for clients, determining and preparing client documents (such as SOAs), and completing administrative and back-office activities, and must be able to satisfactorily identify and resolve ethical dilemmas in accordance with legislation.

Throughout this whole process, the candidate, supervisor and licensee are required to maintain accurate records of the candidate’s activities and keep ASIC informed at the necessary junctures. 

But having secured his PY position, Raddysh noted he often found himself needing to educate his supervisor on what is required in each quarter and ensure that his work was signed off. 

“They’re really relying on the candidate a lot, even in this business still, to make sure I own that and understand what’s required to progress to the next step,” Raddysh said. 

“Rather than them saying, ‘So what you need to do, Jackson, to get yourself sorted is …’, I have to go the other way and say, ‘This is what I need my manager to do in order to move forward to the next step’.”

He suggested what will help licensees is having a guide or template to help supervisors understand what is expected of them, giving them a roadmap for the PY program, and avoiding a “piecemeal” approach which fails to give candidates a full picture of the business or process.

“Some kind of uniform process where people can look through and say, ‘This is the regulatory regime, this is best practice, here’s what it probably should look like’, but tailored to your own unique businesses.”

Raddysh also felt prospective PY supervisors would benefit from a learning module or short course to prepare them to take on this new responsibility.

“You can imagine the confusion or anxiety for a practice principal who’s onboarding their first PY and trying to understand all the myriad of requirements and how they interact with the licensee, and if they are self-licenced, what does that mean? All these different things are a bit to chew off.”

Supporting the next generation 

While the industry has acknowledged the time and effort of supporting a PY candidate, there is a separate argument they will be bolstering the next generation of advisers and potentially creating a succession plan for their own business. With less than 16,000 advisers in the industry and an advice age of 52, the industry could shortly face a problem when these advisers retire.

Nicholas Matheson, a PY adviser from Sheffield Financial Group in Sydney, said training up a PY could also reduce key person dependency risk when it comes to selling the business if the adviser retires. 

“The business is only worth something if it can continue to carry on. If you don’t have good processes and systems in place and staff who can run the business after you exit, that really cripples the value.

“New people need to be sufficiently experienced to replace that level of skill because the clients won’t stay if they’re not confident that they are getting the same quality of service and planning.”

While Vaka said he was unlikely to take on a PY currently, he agreed the potential of leaving a legacy might prompt him to work with one in the future.

“If we can bring people in and show them the way that we think advice should be done, there’s a value to that that we leave behind after we go. I quite like the idea of having almost like a procession of PYs come through the business, and you train them up on the way that you think things should be done, and then when they’re ready, they go off into the world and they do their own thing. 

“When you walk away from the profession, if you know that you’ve helped four or five people on that path, that can’t be a bad feeling.”