Although the Financial Adviser Standards and Ethics Authority (FASEA) says 400 new entrants are doing their professional year (PY), it is still an underwhelming amount compared to the adviser roles that have departed.
FASEA said the number of new entrants that had commenced their PY had risen from 46 in 2019 to over 400 today.
However, with the total number of advisers having already dropped below 20,000, the number of new advisers doing their PY was unlikely to sustain the same numbers it needed to replace.
Colin Williams, Wealth Data director, said to put the dire state of the industry into perspective – 8,068 roles had gone since the start of 2019 and this year saw a loss of a further 769 roles.
“This year is a strange year because so many people are going to drop off because of the FASEA exam and my predictions are that it’s going to be around 4,500 to 5,000,” Williams said.
“The big issue for the profession is that the big four banks acted as a ‘nursery’ for new advisers. Now they have effectively moved out of advice, there isn’t an obvious group to replace them at the same scale.”
Keith Cullen, Wealth Today managing director, previously spoke to Money Management about the struggle to start a PY for an adviser.
“One of our advisers in Newcastle had a couple of young people that had recently graduated that have been working with him in back office style positions for a couple of years,” Cullen said.
“He was hoping to put them through their PY, but neither of their qualifications meet the standard, so now they have to do bridging courses.
“Now that’s a bit of poor planning on their part, but that’s emblematic of the problem we have, where two young graduates who have been working in a practice for a couple of years would be ideal candidates, but are unable to do that.”
Cullen said if the industry settled down to between 10,000 to 20,000 advisers, it would still require 500 to 600 new advisers doing their PY every year.
“I just don’t see the model in place can sustain the output required and I don’t see it filling up for the exodus we’re going to see in the next few years in particular,” Cullen said.