Industry stability needed to attract young entrants

The financial advice industry needs to demonstrate its resilience as a sector in order to be seen as an attractive long-term career and to keep on attracting younger people, according to Lifespan Financial Planning.

Speaking to Money Management, Lifespan’s chief executive, Eugene Ardino, said although there was still more to be done by the industry participants to make it an attractive profession for the younger cohort, the most important component was the sector’s predictability.

“I think the industry needs to stabilise a bit, it is a lot to ask someone who is fresh out of the university to do a Professional Year and come to an industry that is constantly changing with no idea where you are going to be three years after you are in,” he said.

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“It is very difficult to support a professional year people, and only bigger businesses can do that.”

Ironically, he said, the bigger players were often the institutionally-aligned groups who had already left the room.

“I also think that as industry participants, there is probably a lot more we can do like getting more involved in graduate programmes with universities, but a lot of this is also about building a profile of the profession, to build the awareness and letting potential entrants know what is all about,” Ardino added.

“And at the moment, there is not a great story there as everybody is tight and stressed and things are changing very often.

“So, I think we are going to see a few more years of large numbers of advisers exiting. But I personally think this actually needs to start at the very top at the government that needs to provide us a little bit of stability first.

“I think that it will be a few years before you start to see anything close to the numbers of new entrants, going back to before the Financial Adviser Standards and Ethics Authority (FASEA) regime, which started a few years ago, and you had a really nice steady flow of new advisers coming in every month irrespective of what the industry was doing to promote itself.”

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I think Eugene failed to identify the elephant in the room. The industry's "instability" is a direct reflection of the tsunami of government legislation and regulation that has smashed the industry for the past decade. Wave after wave of regulatory change has meant licensees and advisers have diverted their attention away from their clients and business to focus mostly on compliance and avoiding any hint of a "breach" (accidental or not) for fear of being publicly shamed by ASIC. Let's start by telling government to put a pause on legislative & regulatory change, unless of course it's to simplify and streamline what has become an Eton Mess of rules that have negatively impacted clients and advisers alike.

Educators have been constantly saying this since the royal commission but few have been listening. There is a negative perception by a lot of students of the industry so they steer away from it. Further there is a lack of promotion and internships offered by the industry so students simply don't know or understand the opportunities and players. We (accredited university providers) have been begging for the industry to become more involved but few organisations seem to be able to or interested.

These young people are probably smarter than you think. Financial planners are fleeing the industry and the institutions have closed up shop because the industry is no longer viable, except for a small niche of wealthy clientele. Why would you want to be saddled with a huge HECS/HELP debt for a course with almost zero career prospects?
Your colleagues on the FASEA board have a lot to answer for. They prioritised their own courses out of self-interest, and then wiped out the career prospects of their own students by implementing an extreme, unprecedented, and unworkable Code of Ethics.

I never said the young people were not smart. By the way the FASEA board are not and have never been my colleagues. I'm only one of the underlings who have taught the stuff FASEA prescribed us to teach.

Eugene, like others who have commented on this post, the government, ASIC, Hayne, Industry Funds and opposition members of parliament decided that it was easier to judge, hang, draw and quarter the "low hanging" fruit, the adviser rather than deal with the root cause of most of the problems in the profession/industry.

In simple terms, it would not have mattered who was in power, none bothered to look at the cause of the problem and hitting a walnut with a sledge hammer was the only option.
Can you imagine any adviser providing a solution to a problem without considering a number of options, and not indicate the consequences, ramifications and ultimately the costs involved , and equally the benefits of each option ?

And yet we have a government who doesn't care and was so short sighted that they have destroyed a large part of the advice profession.
Some of you may well think that's a good thing because you've survived so far, but let me suggest that the government and the regulators haven't finished with you yet a long stretch.
I can't think of any graduate who would want to enter a profession that is so heavily regulated to the point that trying to survive in the present environment has a lot more in common with the television show .."Survivor"

As a younger adviser - I would not recommend financial advice as a career path to anyone.

There are much better opportunities within finance that come with higher esteem within your community and do not have what feels like perpetual uncertainty regarding your future.

I really love what I do for my clients but I hate the almost perpetual uncertainty of the world I operate in.

If I could turn the clock back 7 or 8 years, there is no way that I would have chosen to be a financial adviser. I'd have been much better off from a career and health perspective doing something else.

Relative to my peers who have gone into other finance careers, they have done much better from a risk adjusted perspective with career progression, have better health, less stress, less risk, work less hours and earn more. They also have clearer future career pathways which give them something to aim at and have the ability to move horizontally within an organisation to try something different whilst still applying their skills, education and experience. Financial advice is quite bespoke and often doesn't afford as many opportunities.

Although it seems clear that our society is better for having financial advisers within it, I cannot in good conscience advocate or promote the ' advice profession' to young people who might consider entering based on my current experience and sentiment.

Greater certainty moving forward will help considerably to me reconsidering. We're three years post Hayne's Final Report and the future for advice remains about as clear as mud and can be changed at the stroke of a pen.

In my view, legislators, regulators, academics, professional associations, consumer advocates etc..... need to think about this more next time they write a policy or place a submission. Unless of course they think that our society is better off not having financial advisers.......

Good comments mate. As a younger adviser, I also echo the same thoughts and would not recommend people join the industry.

As a former paraplanner (4 years) and just completed the PY I'm having a hard time accepting the administrative difficulties in the profession, the scaling issues, costs, risks and lack of prestige advisers have to deal with. Accountants are held in much higher regard than advisers and it seems most Australians think they are their own best financial adviser. They have no idea about the degree requirement and the constant professional development.
I broadly agree with Arcadian's comments. The risk isn't worth the reward and the opportunities that many big talkers in the industry still hold out for are basically the same fish: people willing to pay a minimum of $3000-$4000 for advice. Then there's the issue of maintaining a book on hourly fees.
And good luck to the advisers telling clients to hold their portfolio for the next 5 years with no changes and getting by providing a few market updates and a little chit chat. How can those fees be justified?
How about the advisers recommending a client hold index funds and simply matching them to basic model asset allocations? Talk about making it as easy as possible for “robo-advisers” when that’s their service.
I guess I’ll see it out two more years. Until then I’m just another salesperson who’s yet to quit this industry that’s been an echo chamber as long as I can remember. There are millions of finance professionals out there who are better paid and more respected than financial advisers. Better career progression too etc. as said by Arcadian.

"How about the advisers recommending a client hold index funds and simply matching them to basic model asset allocations? Talk about making it as easy as possible for “robo-advisers” when that’s their service."
Maybe the advisers doing this provide a service over and above making work for themselves re-balancing underperforming active funds every year.

Portfolio management should be one of the smallest things an adviser manages, it should be the clients comprehensive situation to ensure they are on track and comfortable with how their financial situation is progressing.

Forgive me, but if your views around the value of FPs centres around client portfolios it is no surprise to me that you're looking for an exit.

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