With the latest Financial Adviser Standards and Ethics Authority (FASEA) exam results showing another drop in the pass rate, and the reality that not enough new advisers are coming through to replace them, there is a growing concern there won’t be enough advisers in the industry to give affordable advice.
The most recent FASEA exam showed a pass rate of 82%, the lowest of the four exams, as each result had continued to drop.
Phil Anderson, Association of Financial Advisers (AFA) general manager policy and professionalism, said it was a concern that Australians may not be able to get affordable financial advice.
“The more people who leave, the worse the situation gets, we need to hold onto as many existing advisers as we can and we need to ensure that we have a flow of new advisers into the market,” Anderson said.
He said there were obstacles making it difficult for new advisers to join the industry and not enough students studying financial advice.
“It’s been hammered as a result of things like the Royal Commission, [given] our coverage over recent years it’s not surprising that people are not saying they want to become a financial adviser, but over time that will dissipate,” Anderson said.
“It’s going to be important that we do get out to future advisers to encourage them to take the profession up.
“But there’s other obstacles that are preventing people coming into business at the moment, like the professional year which is a challenging requirement.”
Because it was a big commitment from businesses to bring in new people when they’re not going to generate much revenue, it made it hard to develop new talent, if that talent was coming into the industry.
“Some of the big starting grounds for new advisers in the past, such as the bank-owned channels, have very much reduced their businesses,” Anderson said.
“If we’re going to need to get new advisers to come into this industry via the self-employed side of the market, then things are going to need to be done to make it more economically viable for that to happen.
“We’ve got to look very closely at how we can do more to enable more advisers to come in through that channel because that’s going to be increasing important with the big banks stepping away from advice.”