PY compliance 'overboard'

The amount of compliance and oversight required to push through an adviser though the professional year (PY) is overboard especially given there is no guarantee on the future of those advisers.

Speaking to Money Management, Sofcorp Wealth partner and financial adviser, Tracey Sofra said taking on a PY adviser was a massive investment for small advisory practices given the amount of time spent on training, monitoring, checking advice, and supervising.

“It’s a massive investment for businesspeople. I don’t think the industry or regulators understand and there’s no guarantees at the end because sometimes things don’t work out so how do you guarantee what’s going to happen?” she said.

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“I don’t disagree with a level of supervision, mentoring, training – I totally agree.

“You’ve got to be serious about developing the up-and-coming planners within your firm but I think they’ve gone overboard.

“There’s not a lot of balance in our industry at the moment when it comes to compliance – it’s just overkill. They’ve lost the plot and gone overboard. At some point the pendulum will turn the other way and I’m guessing we’ll find balance along the way at some point.”

Sofra said advice practices that looked to take on PY advisers needed to have structure and a system in place so that it was not too taxing on the business but also benefitted the planner that was being developed.

“It always comes back to systems, methods, structure, and some sort of framework to help guide and go through that. You can’t go in there ad hoc,” Sofra said.

“But you’re going to need more hands on deck. All of this is taking away from the main planners whose value is sitting in front of clients. My value is not ticking boxes and making sure I complied. At the end of the day it [compliance] doesn’t make any money for me as I am a small business.

“So, if I’m best in advice that’s where my most value is – that’s where I should be spending 90% of my time. The up and coming developing staff, they need to get their hands dirty and get in the trenches like we did 20 to 30 years ago and that’s where their value is and they’re going to get so much out of that.”

However, Sofra noted that it was important to take on talent who were keen, had the right attitude, and intelligent to progress the business.

“If you don’t offer it to him he’ll just go and find it somewhere else and it’s beneficial to the business because the longevity of the business relies on new blood coming in as well and the older planners need a way to transition out slowly,” she said.

She also said it was important to have a pathway for the PY adviser to progress to the business such as moving to become and associate and then partner.

“It’s important to be able to show them the vision of what their future looks like. You need to put yourself in their shoes – it’s not just about myself, my business partner, and the business. It’s also about how the PY adviser fits into the business and how they feel about the whole thing.”




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The system is set up so if you commit to training up a new adviser and go through the PY process, your competitors will be waiting in the wings to poach your person once they're fully qualified. Unless you have a family member looking at taking over the practice some day, why bother.

Why go through the hassle and expense of PY for a new graduate, when there is a surplus of experienced advisers available? The banks exiting from advice, combined with a regulatory driven culling of less profitable clients, has left plenty of advisers looking for new roles. There will also be a flood of additional qualified people once the big "remediation" projects dry up.

Sure, there's some advisers retiring early or changing careers due to FASEA requirements. But not at the same pace as the overall decline in adviser demand. 15,000 advisers will be more than is sustainable under the current regulatory environment. So unless FASEA drives significantly more exits than most people are forecasting, there really is no need for new entrants for a long while yet.

You tried to hire a decent adviser recently? I am going to guess not.

There maybe a few out there that I would hire and could afford, I haven't met them yet. And it will get worse. If you are fully accredited, can actually talk to clients, have some technical skills and some experience, you'll be able to nominate your salary in a few years, or sell yourself to the highest bidder.

TV show idea, HOT ADVISER AUCTIONS, we can auction off semi decent advisers and watch the salaries climb every week.

This article isn't about hiring decent advisers. It's about hiring someone to train up as a decent adviser, without all the costs and complexity associated with the PY. Why not get someone who has a little experience and has passed the FASEA exam, but needs guidance from an experienced principal to develop into a good adviser?

I was a "decent" adviser, for many decades, but have now exited the industry. Compliance has gotten in the way of common sense. It's that simple. Fortunately, now in my mid sixties, I have found another role outside of financial services that I can put my skills towards. I have not missed the BS that I have had to navigate in recent years one little bit. If anyone asked me "should I become a Financial Adviser?" My answer would be no. "Drive trucks, you will earn a bigger net income without the stress."

Is this the 'Old Fella' who's been a commenter on here for many years? If so, damn sad to see you go, judging by your well balanced comments, our profession is the worse for your departure.

Out of interest, what have you moved into? Hopefully they'll appreciate the thought level you can bring.

Yes, I'm the same old "Old Fella." Thanks for you wishes. Today I started a new career in the not for profit sector as a CEO. I may be old, but I'm not finished yet. Smiles Emojies.

You wouldn't be based in north qld would you?

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