‘A profession in decline is not a strong profession’: Abood urges action on adviser numbers

Speaking at a media briefing in Sydney on Wednesday, Financial Advice Association Australia (FAAA) CEO Sarah Abood said the association want to ensure that the profession is not just “reacting to legislation or crises” but getting on the front foot and “leading as a profession rather than being led”.

One of the “big themes” that Abood flagged for the coming financial year that can help the financial advice get on the offensive is increasing the number of advisers and regrowing the profession.

The latest numbers show that there are now 15,589 advisers in Australia, which represents a drop of almost half since 2019.

“We’ve lost a lot of experienced advisers that we didn’t need to lose, we didn’t want to lose, and their clients are trying to find new advice relationships and finding that hard, so the loss of that experience has been really problematic,” Abood said.

“But the other point that we’re looking at now is that there’s been an even bigger problem in new entrants. New entrants have crashed. They crashed to zero straight after 2019.”

While there have been improvements in new entrants joining the profession in the years since, she said there are currently just 312 advisers who first provided advice in 2023.

“It’s not enough to offset the advisers that are going to retire. We could put a zero behind that and not really impact meaningfully on the supply of advice. So, we must focus on that,” Abood said.

“It takes four years to train an adviser, so we see this as a really urgent problem and something that we need to address in a really meaningful way really, really soon.”

While she noted that some advisers that are running profitable businesses with “more demand that they can deal with” may not mind the lack of competition in the short term, it is not healthy for the broader advice sector in the long term.

“We know that a profession that’s in decline is not a strong profession. It’s not going to end up well if we don’t stop that,” Abood said.

She added: “We’ve got this massive demand-supply crunch that’s going to make our current problems even worse. And of course, per advisor costs. They continue to go up as numbers decline. So, there’s a whole lot of reasons why we think getting more numbers into the profession is absolutely critical and an urgent problem for us to address.”

Among the ways the FAAA is looking to bring more advisers into the profession is through an advertising campaign that will specifically promote financial planning as a great career, which Abood said would be targeted at students and potential career changers.

“We want to really get more people considering this career, get more students coming through these degrees, get the front of that pipeline up again,” she said.

“We haven’t been in market, I think forever, talking about why you should consider financial planning as a career. We’ve often relied on the children of existing planners, clients and so on, but we believe the time has come to really be more overt and that campaign will run in next financial year.”

She also pointed to the previously announced Advice Academy, which the FAAA is launching in partnership with Kaplan to provide additional training and support for professional year candidates.

“Over time, the Academy will help connect these candidates with employers so we’re not losing people at the end of their degree,” Abood added.

“Help them come through that program and help them come out the other end, more capable and job ready for the practices that they’re working in.”