How can the advice industry collectively improve the PY?

Members of the financial planning industry have shared with Money Management how they believe the Professional Year could be further developed. 

Since 2019, new entrants hoping to become financial advisers have had to complete a mandatory year of training under a supervisor, known as the Professional Year (PY). 

Those undergoing the PY were required by the Australian Securities and Investments Commission (ASIC) to work 1,600 hours, which could be started in the final stages of their degree, and at least 100 hours needed to be structured training.

Alisdair Barr was founder of technology platform Striver, an HR technology service that offered networking, opportunities, mentorships and entry-level career pathways to encourage young people to join the advice profession. 

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In discussion of the PY with Money Management, Barr affirmed: “There’s a lot of benefits. We are getting new people into a business, a fresh set of eyes, they’re a lower-cost resource and tech-native”. 

Neil Macdonald, chief executive of The Advisers Association, said: “Employing graduates is likely to be more affordable than hiring experienced advisers, and they’re likely to be tech-savvy, which could lead to greater business efficiencies”.

Advice licensee PGW Financial recently launched its PY Program, which included running an induction for new graduates followed by monthly stakeholder meetings to address concerns, appropriate training and overcoming difficulties. 

Benjamin Ross, national operations manager at PGW Financial, expressed to Money Management that current participants had found the PY program to be greatly supportive in progressing through various milestones.
 
“The PY is not just a task that you must tick off to become an adviser; it is a journey. The more you can learn on this journey, the better prepared you will be when you arrive at your destination,” said Ross.

Having a structured process enabled the participants to implement their financial advice theory into practice, he explained. 

This was echoed by Barr, who said the structured mentoring process prevented young people from “being thrown in the deep end” of financial advice and allowed them to be supported by experienced colleagues.

Progression moving forward
While the PY was a way to bring new entrants to the industry, there had been criticism that it placed too many demands on advice firms to act as their supervisors and formulate a structured plan.

For smaller AFSLs, supervising graduates during their PY could impact a firm’s productivity levels as well as the costs of paying new advisers.

With this in mind, industry participants felt there were ways in which the program could be improved.

Macdonald and Barr echoed each other in promoting collective work from educators, technology providers, licensees, fund managers, insurance companies and advice practices to further improve the supervision, recording and assessment of PY. 

“Like any other profession, we need to reimagine and redevelop our own future rather than relying entirely on governments and lawmakers. We need to do it together and we need to do it now,” said Macdonald. 

Additionally, Striver’s Barr pushed against sole reliance on government support to cover the costs of training new entrants. Instead, he felt the profession needed to look towards larger licensees and superannuation funds to collectively build a breeding ground for young advisers.

He put forward greater encouragement around support staff as a possible solution, which would take less pressure off advisers to train younger entrants. 

“The effect of hiring great support staff is not just building a pipeline, but it also allows people to run businesses more efficiently,” he explained. 

One possible option was an organised recruitment campaign that could focus on students who had studied relevant subjects, such as mathematics or business management, but had not considered financial advice as a career. 

“We have a window of opportunity when people first graduate to encourage them to consider other options and doing what may be just a few additional subjects to follow an advice career,” Macdonald said.  

Such a campaign could further encourage the positive aspects of the advice profession and support the replacement of older advisers exiting the industry, he said.

To boost the next generation of advisers, Barr concluded that firms should view the PY as an opportunity for their businesses rather than a burden.

“[The PY is] a way to encourage and invest in the next generation; don’t see it as a burden but as a fantastic opportunity to pass on professionalism.”