News that a shortage of financial advisers stems from a lack of infrastructure and training opportunities – rather than a lack of interest in the profession – attracted plenty of reader interest this week…
The shortage of financial advisers in Australia stems from a lack of infrastructure and training opportunities rather than a lack of interest in the profession, according to an Industry Round Table hosted by AIA Australia and Riskinfo.
Alisdair Barr, Founder and CEO of Striver, said his firm recently spoke with 250 Deakin University students, the vast majority of whom were unaware of the financial advice career pathway, but were keen to learn more. Despite this, he noted that many students who are interested struggle to find a way into the profession.
He told the panel that the shortage of advisers is not the result of low demand from would-be entrants but of the high barriers to entry – a point mostly supported by the panel.
“There’s a lack of structural ability for the profession to actually take people through a career pathway or a professional year,” said Barr.
…they go through all the hard work, and they leave…
While some firms deliver “the magic experience” to help the next generation of advisers succeed, Barr indicated that too many businesses lack the skills, capability, or capacity to provide proper training.
He also cited data showing that 20% of new advisers leave the industry within two years of completing their training.
“So they go through all the hard work, and they leave,” he said.
Pina Sciarrone, AIA Australia’s Chief Retail and Advice Officer, described the situation as a dilemma, pointing out that if more mature-age advisers had remained in the profession, their children might have followed in their footsteps. “Intergenerational succession…You don’t see as much of that anymore,” she said.
She also argued that reduced commissions have added to the challenge, given the cost of training new advisers who cannot generate revenue during their Professional Year.
On education standards, Sciarrone said the requirement for diplomas and degrees has created “massive hurdles” for those seeking to enter the advice profession, particularly career changers.
“We can’t get the industry to meet the education requirements,” she said. “So for me, there’s a problem there already. Maybe the benchmark is too high.
“For someone that’s looking at this industry they’re saying, ‘I want to get there, but I’ve got to start here. How long is it going to take me to get there?’”
Drew Burden, Partner and CEO, MBS Insurance, would like to on-board five advisers every year.
“But that does mean that those individuals need to be mentored, to be supported by other people in the team – it takes time and money. Firms able to take on trainees can generally only support a handful.”
Editor’s note: Subsequent reporting from this AIA Australia Round Table in the coming weeks will consider the red tape, inefficiencies and various other roadblocks preventing a greater intake of new advisers, including suggestions leading to a pathway forward.
Simply cannot believe these life company execs are feigning surprise or disbelief that advisers are leaving the 'industry' en masse, in disgust and retiring. Back between 2015 to 2020 they were told in excruciating detail how badly this would happen if they sat on their collective hands and did nothing to rally together against the raft of changes being pushed by the govt and their trolls/special interest groups. I got out in 2021 as I knew the educational requirements were far too onerous (price/time prohibitive) for a simple risk adviser. The twin disasters of FARCE-IA and LIF had just started to bite and besides wasting adviser money and time it only served to help lazy, duplicitous, greedy, self interested politicians justify their existence and pay cheques.
I only have two regrets: I miss my clients and I should have sold up 5 years earlier. The industry, the products (esp IP), the life companies (most of them) and the future prospects are a consistently diminishing shadowy shell of what they were in the 2000s and 2010s. Good luck to all my fellow advisers brave enough (dare I say silly enough??) to stay and battle the immovable wall of govt, compliance, unnecessary red tape, ridiculous educational requirements and myriad other elements designed to keep risk advisers away from their core purpose involving client-facing quality time.
Squeaky 21 has summed up very well what happened and the sad part of all this, was that it was TOTALLY avoidable with common sense solutions being ignored.
I started in the Industry in February 1987 having come from a different occupation, just like the vast majority of new entrants, the difference being back then, it was attractive with less onerous requirements to join.
Risk advice is NOT Financial Planning advice. Never was and never will be, yet the vested interest groups got control of the agenda and totally stuffed it up.
My son joined the Industry as it was attractive 20 years ago.
Today, what we have is a red tape maze that drives people away.
Only a well-paid, institutionalized Government bureaucrat could have dreamed up the total impasse that has devastated the Life Insurance Advice Industry and those same people still seem to be holding onto their jobs while causing Billions of dollars damage and millions of Australians paying the price.
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