Has financial advice graduated into a profession?

Over the last five years, the financial advice industry has graduated into a profession following a period of strenuous work which has seen it shed over 40 per cent of its ranks, the chief executive officer of the Financial Advice Association Australia (FAAA), Sarah Abood, said.

Speaking at a breakfast event attended by Financial Services Minister Stephen Jones, and organised by the FAAA and the Financial Services Council, Ms Abood said: “We would be the world’s newest profession”.

“We have all the education, the ethical, the experience obligations, and we are living up to these obligations. And something I’ve seen shifting in my short time in this role is a recognition at all levels of government and within the regulators that financial advice is a profession.

“We’re not people who sell financial products. We’re people that advise clients in their best interest and that is a very profound shift. We’ve earned that, we’ve worked really hard for that and we’re starting to see the outcome, at least that’s been my observation in my time in the role.”

Ms Abood also shared that, behind the scenes, a lot of work is going into creating a sense of camaraderie in the profession.

“Behind the scenes, there is a huge focus on working on coming together on areas where we agree. Famously, there are a lot of voices in financial services, and it was observed to me, when I started in this role, that there was a perception that our profession couldn’t agree, couldn’t come together. There were too many different voices saying too many different things,” Ms Abood said.

“So, there’s been a very concerted effort to try to identify areas of agreement and to bring those to the government so we’re able to say, “Yep, there is stuff we disagree on, yep, here’s the stuff that we all agree on”. That is very helpful to the government, to Treasury, to the regulators, to understand where our profession has a consistent view, and there are many areas where that is the case.”

But whether the government considers the advice industry a profession is debatable, with Mr Jones telling ifa on the sidelines of the conference that the industry is still moving towards professionalisation.

The government, he said, is “here for a professional industry”, and is helping this along with the introduction of things like the experience pathway.

“We’re on a pathway towards professionalising the industry. This is a very pragmatic, once only, through the gate, then the gate is closed, mechanism to ensure that we don’t throw the baby out with the bathwater,” Mr Jones said.

The experience pathway has been a contentious piece of legislation with many advisers arguing that it would dilute the quality of advice.

The legislation, which qualifies an adviser as having satisfied the educational prerequisites if they have 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021, along with an unblemished record, is viewed by Mr Jones as a means to ensure the 16,000-strong body doesn’t decrease further.

Speaking at the breakfast event last week, the minister said that the pathway is “a very pragmatic solution” and stressed that it doesn’t diminish the fact that the industry is progressing towards professionalisation.

“Whatever we’re doing in that area will be about ensuring we maintain an appropriate model for professionalisation. But we’ve got to find more ways for people to be able to enter the industry, more ways for people to get the appropriate qualifications to practice in the industry than we have at the moment,” he added.

According to Wealth Data, as at 28 September, there were 15,710 advisers in the industry.