As financial adviser numbers struggle to surpass 15,600, Ord Minnett and Morgan Stanley believe large wealth firms like themselves have a major role to play in attracting new entrants.
Some 511 new entrants joined the Financial Advisers Register (FAR) in 2024, according to Wealth Data, despite an estimated 1.3 million Australians with unmet advice needs who plan to see an adviser.
Boosting new adviser numbers has long been cited as a way to improve the supply/demand issue plaguing the advice profession, underscoring the need for large-scale training programs.
According to Morgan Stanley and Ord Minnett, Australian wealth management firms in the big end of town have a key responsibility to attract and build up the next generation of advisers.
Wealth management players have become particularly important following the exit of the banks from the advice sector, who were previously some of the largest recruiters of new advisers prior to the Hayne royal commission.
“Essentially, it’s incumbent on the larger firms like ours to ensure that we are growing the advisory industry,” Frank Hegerty, Ord Minnett’s head of private wealth, told Money Management.
“Growing that next generation of advisers is absolutely upon all the main firms to see what we can do to bring more people into our industry. It’s about nurturing that talent through and attracting them so that we may try and bridge that gap between the unadvised and advised moving forward.”
Agreeing with Hegerty, Rebecca Hill, head of Morgan Stanley Wealth Management Australia, said large wealth firms like Morgan Stanley have a major role in attracting more advisers into the industry.
“We can invest in robust training programs and provide clear career pathways to upskill those interested in becoming financial advisers,” she explained.
Morgan Stanley Wealth Management Australia has approximately $42 billion in funds under management, while Ord Minnett has over $67 billion in funds under advice.
Both wealth heads detailed the graduate programs offered by the respective firms. At Morgan Stanley, the business offers a portfolio associate program for its client service managers who have aspirations to move into an advice career pathway.
Hill elaborated: “Through the portfolio associate program, participants undertake formal education and structured training in areas such as client engagement and business planning under the supervision of a financial adviser. The program also ensures portfolio associates are compliant with the professional education standards required as financial advisers.”
In addition to this, Morgan Stanley has a summer internship program for students in their penultimate year of university, providing training and hands-on work experience for those interested in acquiring broader experience within wealth management.
Over at Ord Minnett, the firm operates three main structures: a six-month graduate program, professional year (PY) program, and three-year associate adviser program.
Hegerty previously noted that Ords’ graduate program has received double the number of applications from 250 to 500 year-on-year, underscoring rising interest from graduate students in the advice industry.
“What we’re aiming at doing there is giving those graduates a really rounded experience in the firm across administrative, back-office operations, right through to the client-facing private wealth advisory business. That gives them a rounded perspective of the full advice process,” he said.
“The ultimate aim is that we’re able to then support those graduates into finding full-time roles.”
While the three-year associate adviser program is a significant investment for the firm, Hegerty said programs like these are necessary for the future of the profession.
“[It’s] a significant investment internally that you won’t necessarily see for some years, but it’s an investment into both our clients and the firm’s future. That’s the only way that we are going to see growth, is for firms to be placing that investment in organic growth.”
Money Management also spoke with AMP and Count last year to hear how the advice businesses were providing pathways for new entrants into advice.
Educational changes broadening the funnel
Last month, the government announced it will reform the education standards for financial advisers by opening up the number of approved degrees that students can undertake.
In particular, it will remove the requirement for individuals to complete an approved qualification offered by only a limited number of higher education providers.
Incoming advisers – such as those studying commerce, economics or finance – will still need to meet minimum study requirements and complete prescribed advice subjects.
“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.”
Hill and Hegerty both expressed their support for these incoming changes as the government works with industry and higher education providers to ensure an appropriate transition.
“We welcome the recent changes in legislation from Minister [Stephen] Jones in terms of opening up that education pathway, because ultimately what that’s going to enable us to do is look at a much greater pool of talent across your business and your commerce degrees across our sandstone universities,” Hegerty said.
“There’s no doubt that opening up the new entrant pathway to all the universities across a business and commerce degree broadens the funnel. It’s disheartening for university graduates to hear that the course they did may not then give them a pathway through to advice, whereas that’s now really opened up and made it far easier for top tier candidates to come through.”
Echoing this, Hill added the new standards will accelerate the development of future advisers by reducing the cost and time to meet the requirements for most students studying a commerce, economics or finance degree.
“These changes are aimed at helping new advisers enter the profession more easily and hopefully will lead to more students considering a career in financial advice,” she said.
