People will not flock to become advisers

People are not going to be flocking to enter the financial advice industry as there are too many roadblocks and what will be left are advisers only advising the big end of town that can afford it, according to Connect Financial Service Brokers.

Connect chief executive, Paul Tynan, said the industry was too hard to enter for graduates and the only way to succeed in financial planning was to be self-employed but those salaries would be low.

“Some of the big salaries in the past have been paid by institutions, and they've forced up those salaries but they're not around anymore,” he said.

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“I've got people coming out of banks and they come to me and say ‘Oh, Paul can we buy a business?’ ‘No, there’s no stock.’ ‘Oh, are there a lot of jobs going around?’ ‘What are you on?’ ‘300,000’ ‘No one's playing $300,000 in the real world’.

“So, there's a real big reality check for everyone in the industry, right from the politicians down. All the politicians know they’ve stuffed up.”

Tynan said there were a lot of buyers who were coming out of the institutional side looking for smaller advice firms but that there was a lack of stock.

However, Tynan noted that there were not many professions that could earn a lot of money like in financial planning.

“I can't tell you about any other profession that can actually earn a lot of money. For example, I sold a business this year for say, seven times EBIT [earnings before interest and taxes] for over $10 million with 93 clients because the adviser said ‘stuff the industry’,” he said.

“No other business makes that kind of money. That’s the other side of the business and these people are not affected because the people they give advice to can afford advice.

“That's why advice now is elitist and it hasn't affected all people with money. It's only affected people who haven't got money – the ones that really need advice.”

Tynan said experienced financial planners could really help the system but a lot of them just “shook their heads” and said it was too hard to give advice as it was too bureaucratic, too much paperwork, and there was too much red tape.

“What economics 101 says is that if you're going to have less advisers and there is a need for advice, it's the place to be,” he said.

“You can make a fortune in the next 10 years and some people will if they've got the right business model.”

When asked what the right business model was, Tynan said it was to “forget about trying to look after mom and dad, and the majority of Australians who need advice the most – forget them. I'm sorry, the big end of town will pay for advice”.

Tynan said suggestions to make advice more affordable and accessible to consumers were:

  • There needed to be an independent review into financial advice (experienced advisers should be a part of this process);
  • The Australian Securities and Investments Commission operational mandate had been ineffective in the protection of consumers, so it is important that the new single disciplinary body is proactive and not reactive in reviewing advice standards;
  • The regulators should produce clear guidelines to separate advice and products;
  • There must be a recognition of past studies and experience in the Financial Advice Standards and Ethics Authority education requirements;
  • The current pathway to attract new advisers into the industry is not workable and needs to be reviewed; and
  • Associations representing advice and products should be encouraged to merge – this would show some industry leadership.

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The death knell has been rung. Financial advice is dead. Being 'professional' has killed the 'industry"!

It's not that "Being Professional" has killed the industry. The vast majority of advisers always have been "Professional" per se' via Diploma, Advanced Diploma, CPD and specific targeted field of specialisation studies. However, recently the powers that be decided that for an adviser to be deemed "Professional", he / she needed to have a Financial Planning Degree. The only problem with that was that a Financial Planning Degree did not exist until recently. Financial Planning Degree's should have existing decades ago but regardless, older advisers with 10+ or 20+ years at the coalface may not have a degree from the University of Melbourne, but they certainly have a Degree from the University of Real Life & On The Job Experience.

It won't take long for the universities to wake up and realise there aren't enough students interested in pursuing a career in this profession. Despite their marketing efforts, any prospective student who speaks to an established adviser will be told to avoid it like the plague. They will dump their courses en masse once the established advisers have completed their bridging courses.

You'll find that has occurred already with only a select amount of Metropolitan Universities now offering a Bachelor of Financial quote 1 University, "there are 180,000 Accountants in Australia and 18,000 Advisers....why would we want to write a course aimed at that small a market."

If Dr's get kick backs from Medicare (aka commissions) does that make them not professionals?

doctors have completed a bachelor's degree at AQF 7 which is 4 years in length so they are professionals.

Congratulations. You have topped today's chart for the most ill-formed and ignorant comment.

thanks, Tim. it's your validation we are after nuffy.

It is not the degree, they will be created overnight, it is where these graduates are going to get their professional year done. I expect they will be set lofty expectations of their first year income by the universities. This will then meet the reality of the profession where the provider of the professional year will pour enormous resources into the graduate with no significatn benefit as the graduate can just walk away after the year. This will be interesting to watch.

"Associations representing advice and products should be encouraged to merge – this would show some industry leadership". Nuh, no chance. Keep the dogs i.e. FSC fenced in and well away from advice. Product manufacturers and those that masquerade as advice providers i.e. banks have had their go and failed miserably.

Didn't read but I am getting more and more cases of members of the public reaching out to me for advice and I just have to say I'm sorry but I can't help you. The people that need advice can't get it. That is a huge problem and has huge consequences for greater society. Pollies haven't fixed anything. They've completely broken the thing.

Just finished the grad dip.
It teaches nothing new. Complete joke.
I'm glad I have 2 non-relevant degrees, 8 years in engineering and some decent life experience (stressful events, etc). A 22 y/o from the suburbs with a shiny degree has no chance.

The original intent of the FASEA legislation was never to force people like you with well developed academic rigour and lots of practical experience back to uni.

But in the hands of conflicted, corrupt, unaccountable, course spruikers from glorified TAFEs, the legislative intent was hijacked.

I have no problem with charging people more money, for a service that is scarce and I have invested my time, money and risk my livelihood providing a service. We should be appropriately compensated for what we do. If you can’t afford me… sorry not my problem.

Well put - that's the reality. Financial planning is a business service and not a public service.

Too many people write off the benefits of a quality education. Having a finance related degree should have been a minimum requirement for a FP 10 years ago. Having life experience is a bonus, but it does not make up for the technical knowledge gained through relevant university study. I have met too many FP over they years who quite clearly had a very poor understanding of financial concepts and have relied on a sausage factory dealer group to roll out a model portfolio and leave anything technical to the paraplanner. In order to become a Profession, it is necessary to purge any planners who are unable or unwilling to gain appropriate qualifications. 5,000 gone in the last few years, 5,000 more to go in the next few years, and the remainder can look forward to a positive future.

I agree a quality education is a good thing and long overdue. But financial advisers are primarily fleeing for different reasons.

exactly the biggest bunch of fleers are the ones who are already in possession of an approved degree (or two) and passed the fasea exam.

That’s absolutely, categorically incorrect. But nice try.

Agreed Art. Unfortunately some of those people who wrote off the benefits of a quality education were FASEA Board members. They did so to force highly educated planners to purchase inferior courses from their own second rate institutions.

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