Financial planners doing their professional year must be capable of generating income or too few advice firms will be willing to take them on, according to the Association of Financial Advisers (AFA).
In a submission filed with the Financial Adviser Standards and Ethics Authority (FASEA) the AFA has said that while it strongly supports the importance of a Professional Year, it was important to ensure that it was economically viable for businesses of all sizes and specialisations to provide the opportunity to future financial advisers.
It said this had two dimensions - firstly, the cost of training a new financial adviser in their professional year must be reasonable and then secondly, the Professional Year candidate must be capable of generating income during this year.
“These are important considerations as otherwise there will be too few businesses that are willing to provide Professional Year opportunities and there will be a risk of dysfunctional competition for financial advisers once they have graduated from the Professional Year,” the AFA submission said.
“It is important that AFSLs and advice practices are encouraged to offer Professional Year opportunities. In our view it would be a suboptimal outcome if it was only the large salaried licensees that offered Professional Year programs.”
“It would also be important to ensure that the Professional Year was not overly educationally demanding or costly as this would serve to discourage career changers from moving into financial advice,” the AFA submission said.
“The Professional Year should not become a significant barrier to entry to the profession, particularly in the context of the expected exodus of a large number of existing experienced advisers.”