Experience pathway to dictate further advice exits

Adviser Ratings’ Financial Advice Landscape Report has suggested that 10 per cent of advisers intend to leave, while another 12 per cent are uncertain about their future.

Given that the advice industry had shrunk to 15,800 advisers by the end of 2022, Adviser Ratings predicted that, based on its findings, 1,500 advisers intended to leave, while another 2,000 are undecided about their future.

Since 2019, the advice industry has shrunk from 27,959 advisers to 15,819.

Although the sharp decrease in adviser numbers seems to have levelled off in the current year, following the deadline for existing advisers to pass the financial adviser exam in September, several unresolved concerns continue to worry advisers.

“While it’s unlikely that every adviser who is unsure will depart, our analysis indicates the future of education standards will dictate the path for some advisers,” Adviser Ratings said.

Namely, while advisers currently have until 2026 to meet the approved degree or bridging requirements, they are eagerly awaiting Financial Services Minister Stephen Jones' decision on the government’s commitment to removing tertiary education requirements for those who pass the exam, have 10 years of experience, and a clean practice record.

Dubbed the experience pathway, the proposal would equate the worth of a degree with 10-plus years of experience in the industry. 

“We’re told the wait for certainty about what will happen with education requirements — specifically, experience recognition — is creating anxiety among advisers,” said Adviser Ratings.

“Mr Jones has remained committed to keeping the adviser exam but said Treasury would look at whether improvements could be made, such as reducing the number of questions. The consultation process also looked at how to attract new advisers to the profession at a time when numbers are quickly falling.”

In December last year, Mr Jones said that the government would begin consulting on this topic early this year and would have provisions ready for legislation in the first half.

“It would be my hope that we’ve got legislation in the first half of next year through to parliament so those things can be settled,” the minister said at the time.

However, an update has yet to be provided regarding the government's plans.