Self-licensing specialist My Dealer Services (MDS) has argued the only way to improve numbers in the financial advice sector is to further slash red tape, which is preventing a greater flow of new entrants.
With adviser numbers sitting stagnant around the 15,600 mark, the business said the profession has reached an inflection point on how to raise this figure.
Speaking at an industry event in Sydney last week, MDS director and founder, Alexander Euvrard, said reducing regulatory red tape that restricts new entrants from joining and removing the “policy brick wall”, making it challenging for career changers to transition, is the key answer to this issue.
“The biggest challenge facing advice practices that we see and hear about every day is the lack of advisers to help grow and support these businesses. It all comes back to making the profession attractive to new entrants and making it achievable to enter,” he said.
In February this year, the government announced it will reform the education standards for financial advisers by opening up the number of approved degrees that students can undertake.
Building on the Delivering Better Financial Outcomes (DBFO) reforms, the changes aim to address the shortage of advisers in Australia and help new advisers enter the profession with greater ease.
“The government will streamline the qualification requirements to expand the pipeline of new entrants to the profession. The current standard is unsustainable. It is unattractive to school leavers due to the restrictive career path and it requires a significant investment in study for career changers,” the announcement stated.
In particular, the government will remove the requirement for individuals to complete an approved qualification offered by only a limited number of higher education providers.
Echoing MDS, the Financial Advice Association Australia (FAAA) also put a reduction in red tape and further support for new entrants on its priority list for the Labor government.
In addition to strengthening qualified adviser numbers, Euvrard also urged for regulators to put careful guardrails in place prior to allowing large superannuation funds to offer advice to its members.
“We can’t ignore the potential role of, and the possible dangers within, industry super fund advice models over the next five years. I do want to say simple advice done well and accessed by Australians needing it is a game changer,” he said.
“These are people who largely do not fit into our business models but absolutely need the access to advice. For those that may be younger, having access to simple advice is actually going to benefit all of us as they will be exposed to the value it creates and be our clients of the future.”
However, he cautioned that enabling less qualified advice professionals to deliver advice could be potentially dangerous, particularly when locking clients into lifetime income products.
