AFA calls for professional year subsidy

In its pre-budget submission to Treasury, the AFA said cost concerns were currently discouraging advice practices from taking on professional year trainees, with the industry’s reputation fallout from the royal commission having already drastically shrunk the pool of graduate candidates.

“There are a range of factors in play here, including the FASEA reforms and increased requirements for new entrants to the profession; the discouragement from entering the financial advice profession as a result of the negative slant from the royal commission; [and] the exit of the large institutionally owned licensees, who were previously an important sector of the market for the development and support of new entrants,” the association said.

With 100 hours of structured training and 1,500 hours of on the job training required before a provisional adviser could be fully qualified to serve clients, the AFA said there was a “significant cost involved” for businesses to bring on new entrants.

It recommended the government provide a subsidy of $10,000 per trainee adviser, which would make a “material difference” in encouraging advice practices to bring on trainees.

“The majority of financial advice practices are small businesses who are currently under tremendous financial strain, however with the right incentive, they could grow their businesses and provide valuable employment opportunities to students after many years of study and set them up for a meaningful career,” the association said.

The AFA said just 58 provisional advisers – those in the second half of their professional year, who had passed the FASEA exam – were currently listed on the ASIC adviser register, compared with 7,600 who had left in the last two years.

“More needs to be done to ensure that [those leaving] are being replaced by new advisers and to encourage more employment and growth in small business and more jobs for students,” the association said.

“The decline in the number of financial advisers limits the accessibility of advice for Australian consumers, and is only going to get worse over the next few years without strong actions from the government.”