PY advisers offer limited value
Professional year (PY) advisers offer limited value to practices looking for advisers because of the costs associated with supporting them and the longer time commitment it takes to train them, according to Guideway Financial Services.
Speaking to Money Management, Guideway Financial Services’ head of client services, Daniel Hicks said provisional advisers were not appealing enough for firms despite declining adviser numbers and rising demand for advice.
“To become qualified as an adviser, you need another adviser to take you on… but there’s not really much upside for that,” Hicks said.
Last week only six provisional advisers were appointed in Australia while the total number of advisers dropped by 59, according to Wealth Data, while the number of advisers in top groups had shrunk by about 5000 in the last three years, according to Money Management’s TOP Financial Planning Groups research.
Hicks said part of the reason PY adviser appointments were not meeting the shortfall of advisers was because of the risks that supervising advisers would need to take on to support them.
He said the risks stemmed from the fact advice provided by a PY adviser, who were often very young, fell under the responsibility of the supervising adviser. And they could not provide advice until they hit a six-month milestone.
“In the past, you could hire people who were more mature and comfortable relating with older, wealthier clients,” he said.
Hicks said advisers were also too time poor to support new graduates as they were busy keeping up with increased demand.
Another reason for the shortfall, Hicks said, was because the scale of graduate programs at large advisory firms had reduced as big banks left the industry or cut back their advice businesses.
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