Prescriptive Professional Year (PY) requirements are hampering the advice industry in a time of declining adviser numbers, says two industry associations.
Speaking at the SMSF Association conference in Adelaide, Marisa Broome, Financial Planning Association of Australia (FPA) chair, said the biggest challenge for its 1,000 student members was cracking that first job to become qualified financial planners.
“So we haven't got a problem attracting people into the study because they can see the amazing opportunities about entering into being a professional financial adviser,” she said.
Being the holder of a licensee, Broome said she lacked the time to supervise a new entrant under the current PY arrangements.
“Do I think the PY is a good programme? In principle, I do,” she said.
“It's very prescriptive and I can't manage that so we need to find more opportunities to train them and give them the experience.”
Association of Financial Advisers chief executive, Phil Anderson, said there needed to be more done to retain the good advisers who remained in the industry.
“There are something like 880 who still have the opportunity to pass the exam,” he said.
“So we're going to provide them with as much support as possible and we can't just judge them in terms of whether they should have passed the exam. Some of them are dealing with issues around the mindset and it is not necessarily a reflection of their capability.
“Whilst we want to reduce the numbers that are dropping out, we want to make sure we're getting as many new entrants coming in as possible.”
Comments
What a sad reflection on the two major Financial bodies who were supposed to be supportive & representative of their rank and file members.
You went missing when your members needed you to stand up for them and now you want to shut the gate after the horses bolted.
Think about why more than 12,000 have left the profession in just over 2 years and with that went a lot of experience, knowledge and client engagement.
I'm not sure why you lacked the vision to not see this coming.
You're a fool for thinking the FPA represented you. Pretty sure they had the vision,if not members would have demanded there resignation, perhaps their vision is not the same interests as financial planners.
Yes, but this will change soon once Industry Super complete the creation of their own Adviser Association "Industry Super Financial Planner Association (ISFPA), which all their FPs will be members of, funded by the Industry funds from fees charged to members. Profits will go back to the funds to be distributed to Unions to boost up their coffers!!!
The excessively bureaucratic requirements for the PY are just an entree to the excessively bureaucratic requirements for every single day of an adviser's working life.
FP graduates should heed it as a warning and change to another career as soon as possible.
It's like the RAAF train Pilots (on the government purse) then QANTAS poaches them down the track. I could not commit to PY Provisional Advice Provider for the high likelihood once 2 yrs passes they jump ship to the next best offer in the market, = nil return on my investment.Surely a bonding guarantee period must be considered post the 2 yr PY or a restraint period in employment contract (if lawful), just putting it out there.
"they can see the amazing opportunities about entering into being a professional financial adviser"...couldn't help but chuckle.
Yep, financial planning undergraduates are being told massive porky pies by their money grabbing universities.
They are told they will be the "new breed" of honest professional advisers that the public has been waiting for, and pent up consumer demand will flow in their direction once they come in to save the industry.
Newsflash kids. Most financial advisers have always been honest and professional. The examples of poor behaviour which came to light in the Royal Commission and Fairfax/ABC were exceptions that were misrepresented as being the norm. The reason most consumers don't use professional financial advisers is that bad regulation of advice makes it too complex and expensive. The decline in consumer demand due to bad regulation far exceeds the decline in adviser numbers due to removal of the bottom of the barrel. There is no shortage of honest professional advisers. You are not the solution. You are being exploited.
@ not hiring on.
You raised an interesting issue that I'm sure most hadn't considered.
The reason being that putting on a graduate for 12 months PY year & paying them $60,000 + super with no initial ROI, but they can make coffees, seems like a big ask for most principals.
But to reinforce your interesting view on the subject, I was once the finance director of a Group 1 golf club in Sydney. We had a 2IC green keeper who asked for financial assistance to the tune of $15,000 to complete his course. I was reticent at first to grant the money unless we got a 5 year guarantee once he qualified that he would stay at the golf club or reimbursed us for our outlay.
I was told that it was against the law to indenture someone in that way.
So the Board went against my recommendation & gave him the money.
But, here's the thing, within one month after he received his qualifications, he left the club for Head green keepers job in Thailand.
Good luck to anyone wanting to give this a go.
Yet one more “ unintended consequence “ of extremely poorly implemented change instigated by people who have no idea about the real world.
The number of regulatory and structural failures in relation to financial services and the provision of advice is simply staggering.
Perhaps "unintended consequences" for ideology driven bureaucrats who make rules with no real world understanding. But far from "unexpected consequences" for those who operate in that real world.
'Piggy' Rantall, the old FPA chief was the architect of a lot of this mess with his holier than thou attitude, pigheadedness on pushing through changes that went against the FPA members interests all for the sake of supposedly becoming a 'profession'. A huge number of the aspects that he threw up as 'reasons' then became the claxon call of Labor about all planners being evil following the GFC and taken up via Hayne's RC, especially "education levels" and "satndards" that led to the FASEA fiasco
The onerous requirements for the PY are just another past of the coordinated and consistent process of the willful destruction of financial planning as a profession.
It is such a bad deal for a principal I am surprised anyone does it.
This is an utter mess.
The exit of nearly 10,000 experienced advisers…the inability to provide new placements for only 10% of that number at best and a massive mental health issue with a large proportion of those who remain with the stealth and courage to continue riding this nightmare out.
What an absolute bureaucratic bungle based on misguided ideology and a sense of control and elite standing by those who don’t know.
They think they know, but they don’t know.
Academics who are entrenched within the sanctum of a University cohort who wrongly believe they have the intellectual capacity to drive an ideology based on misguided theory.
Lawyers and academics have overseen this dismantling and have everything to answer in relation to the void of advice that is now no longer available to the Australian consumer.
Well done to those who were paid to participate…you have achieved nothing.
hmmm, I know the PY year is difficult for advisers and profits/time etc. I'm about to start a person on their PY year and yes it might all not be to my benefit. But it might be. If the FPA chairperson thinks she doesn't have the time, then I think that's poor leadership in terms of growing the profession. I've decided, perhaps stupidly, to give a young person to go on a trajectory that I wish to be honest I had in terms of mentoring. And a part of me says even if he leaves to another practice, I've hopefully educated a person to the benefit of future advice clients. And, I don't see why it can't be productive to my business, he has a job to do, as well as the training - I get it will be somewhat profit negative, but I don't see it as a complete write off, sitting around making coffees as someone has said, I don't understand that comment.
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