A lack of participation by Australia’s largest universities is complicating the pathway for new entrants, according to leading financial advice organisations.
In a podcast detailing his outlook for 2023, Association of Financial Advisers (AFA) chief executive, Phil Anderson, discussed the new entrants for the industry.
These were crucial to stem the adviser exodus where adviser numbers had fallen below 16,000 and currently stood at 15,867, according to Wealth Data.
In 2022, there were around 350 new entrants to the adviser market, the majority of whom joined the financial planning sector.
However, Anderson said a critical issue was attracting young people during their university years, an issue hindered by the lack of participation by Australia’s largest universities such as the University of Sydney, University of Melbourne, University of Adelaide (not currently but was scoped previously), Australian National University, and Monash University.
Approved degrees in financial planning were only offered by a few universities at undergraduate level such as Queensland University of Technology (QUT), University of Wollongong and Deakin University.
Some major universities such as University of New South Wales (UNSW) and University of Technology Sydney (UTS) offered the subject but only at a Masters or graduate diploma level.
Anderson said: “If you look at what we might describe as the sandstone universities, the bigger name universities, none of them have actually chosen to participate in the [Financial Adviser Standards and Ethics Authority] regime.
“So we have people coming from Sydney Uni and Melbourne Uni for whom financial advice is not an option unless they go back and do a graduate diploma.
“The Government is looking at how there can be more flexibility in that and I think that is a really important step.”
Government regulations of education
Financial Planning Association of Australia (FPA) chief executive, Sarah Abood, was in agreement, noting such discrepancies would prove a hindrance in the growth of the financial advice industry.
Previously, FASEA used to manage the accreditation process and once dissolved, the responsibilities for approval of financial planning qualifications moved to Treasury.
“Prior to legislation around approved degrees, and FASEA taking on the accreditation process, an education body called the Financial Planning Education Council (FPEC) undertook an industry-led approval process,” Abood said.
“The education council consists of university representatives and financial planning professionals.
“The universities and the profession (via FPEC), as well as the FPA, have written submissions to the Government recommending that assessments of appropriate financial planning education be returned to the profession and university sector and/or managed by the sector in conjunction with the Government.
“This would enable the education sector to respond more quickly to changes in education requirements for the profession and the scoping of new courses/education providers in a more streamlined manner.”
Abood added there were concerns around students aiming for a sandstone or Group 8 university, only to then be barred from entering financial advice without further study.
“Under the current education requirement, those students will then need to either start again with another undergraduate or do further post-graduate study via another institution to become a planner, even if they have completed financial planning units as a part of their study,” she told Money Management.
Encouraging demand from students
Alisdair Barr, founder of Striver, an initiative to support students and early career job seekers in financial services through networking and mentorship opportunities, observed that a major issue lay in the lack of demand which would spur universities to provide such education requirements.
The grassroots issue was not that young people were being dissuaded by the Hayne Royal Commission’s findings, he argued, but rather a lack of awareness about this career path.
Speaking to Money Management, he said: “As a profession, we’re not doing enough to promote that [being an adviser] is a great opportunity to give back, to make meaningful contributions to people’s lives, and to generate a really good income and living standards for ourselves.
“There’s an opportunity to create demand for young people wanting to study this by, say, speaking at universities about a career in financial planning, talking to first-year commerce students about what a great career path this is.
“If there were hundreds of thousands of people who wanted to study this degree, I believe a Group of 8 (Go8) university would want to step up,” Barr stated.
A second issue was that the financial planning field had historically lacked a clear pathway from a university level into full-fledged careers, unlike law, medicine or accounting.
“At accounting firms, we’re seeing university grads build out straightaway on billable hours and that sort of structure whereas it’s hard for financial advice firms to take on someone who’s not a fully-fledged fee-charging adviser.
“If there’s not a clear pathway, there’s not going to be a lot of demand. And then you’ve got the situation of commerce and business faculties at universities looking at available spots in consultancy or accounting, to gauge jobs and pathways, and we’re not there yet with financial advice.”
a student out of year 12 is looking at a 5 – 6 year path to be able to provide advice. There are a lot of professions to choose from with that sort of time commitment.
My 2 cents.
– Pay in financial planning isn’t competitive with adjacent professions unless you have your own client book (see: ageism, high expenses, lack of support and structure).
– Accounting majors and econ majors have better initial prospects in the job market, greater technical abilities and more career flexibility at all stages. i.e. the type of work and overseas/internationally
– Most graduates do not want to be pigeonholed in financial planning when there are other opportunities in finance.
– Only a few firms are offering clear structure and progression to young advisers and anecdotally, it’s been a painful process and I would not recommend this path to any of my friends or friends of friends.
– Many job listings want support staff who can be locked into a support role – client services or paraplanner.
– While I acknowledge people have to start somewhere, why should a young person study 3 years full time, then hang around for 5 years in these roles at $50k – $75k to hope an adviser would some day be kind enough to supervise them through a PY? Most government jobs pay better, have more benefits and offer clear progression.
The consensus is that there are greater opportunities elsewhere.
I always remember a Uni lecturer telling me year’s ago that when a student looks at the certainty of accounting versus the mess of financial planning they’ll choose accounting every time.
The death march continues…
“As a profession, we’re not doing enough to promote that [being an adviser] is a great opportunity to give back, to make meaningful contributions to people’s lives, and to generate a really good income and living standards for ourselves.”
The woke left wing agendas of our day don’t want the general public to improve their lives, as they would be more free thinking and thereby difficult to control.
Unlike law, medicine, and accounting, which tend to be more reactionary fields, historical in nature, treating symptomatic areas, financial planning can be forward looking, “preventative measures” in application..