FOFA scaring away potential financial planners, says FSC
Regulatory uncertainty is causing the financial planning industry to contract and dissuading young graduates from taking up the profession, according to Financial Services Council chief executive John Brogden.
Speaking at the SMSF Professionals' Association of Australia conference on Friday, Brogden pointed to UBS analysis that showed a 1.7 per cent contraction in the industry over the last year (equating to the net loss of 250 financial planners).
The average age of financial advisers in Australia is 55, Brogden added - and for a lot of those financial planners the current regulatory changes "are too hard, and the value of their practice is getting knocked about at the moment".
The only way to counteract the contraction in the sector is to attract younger people into the profession, he said.
"But if you look at the financial advice industry and you're a 22-year old graduate who's just left university, would you become a financial adviser? Right now you wouldn't, because there's too much uncertainty," Brogden said.
Financial Planning Association (FPA) chair Matthew Rowe pointed out that new members of his organisation would be required to hold an undergraduate degree from 1 July 2013.
Part of the "evolution" of financial planning must see it referred to as a 'profession' rather than an 'industry', Rowe added.
"My vision would be that in 10 years' time there will be a Bachelor of Financial Planning in every university. And the kids who are doing that would see financial planning the same way they would see engineering or the legal profession," Rowe said.
Australian Securities and Investments Commission chairman Greg Medcraft reiterated the regulator's desire to introduce a national exam for individuals who provide general or personal clients on tier one financial products.
"We initially proposed doing it from 1 July 2012, but that's clearly very ambitious so we're probably going to move that to a later date - probably July 2013 with a two-year transition period," Medcraft said.
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
