Tweak regulation to make advice profession more family friendly

Ahead of the Women in Finance Summit 2024, the Financial Advice Association Australia (FAAA) CEO, Sarah Abood, said financial planners who take career breaks to start a family or assume other caring responsibilities find it difficult to navigate the advice profession compared to other industries.

Abood partly attributed this to the regulations advisers face as it is a structural barrier that disproportionately impacts women with caring responsibilities and those who take career breaks.

Female representation in financial advice has remained stagnant over the past five years despite efforts to encourage more women into the profession. According to Adviser Ratings’ 2024 Q2 Database Report, only 22.0 per cent of the advice profession was female.

“For example, if you want to take a year out, it’s hard to find a locum financial planner,” Abood told ifa.

“In financial advice, if a new financial planner starts dealing with a client, the law says that they are a new relevant provider, and the statements of advice need to be rewritten. Then, when the original financial planner returns from a year of parental leave, they might need to do it all over again.”

Abood called for regulation that allows a new planner to service a client on a temporary basis without treating it as a new relationship under the legislation.

“This would help both women and men who want to take time off to raise families,” she said.

“Women are, in a way, canaries in the coalmine who get affected first but these issues affect everyone.”

Abood also called for more “friendly” regulations that would increase flexibility in the advice profession, noting that flexible work is difficult to find in financial planning.

“We’ve heard stories of planners who have struggled to get time out to have cancer treatment,” she said.

“I think these changes would benefit planners across the board, regardless of gender or background.”

Making financial planning part-time friendly

In addition to these barriers, Abood noted that the advice profession is not friendly to part time-employees.

“There’s some recognition of part-time CPD obligations,” Abood said.

“But other obligations like the ASIC or Compensation Scheme of Last Resort (CSLR) levies are not prorated. If you have someone who might be 60 per cent or 80 per cent of a full-time employee’s load, all the costs still apply.”

FAAA has been consulting with the Australian Securities and Investments Commission (ASIC) on implementing changes to increase flexibility in the advice profession, Abood said.

She is also hopeful that the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms will allow advisers more flexibility.

In a statement shortly after the first tranche of the advice reforms passed through Parliament in July, Financial Services Minister Stephen Jones said the second tranche would reform statements of advice (among other measures) and would “further increase access and affordability of financial advice”.

Details of the next tranche are unlikely to be available to advisers soon, with Jones stating that it will be developed over the second half of this year.

Abood said that during her session at the Women in Finance Summit 2024, she will encourage more women to enter the advice profession as there is an unmet demand for advice and female financial planners.

“Any female who comes into the profession is not going to have to worry about bringing new clients on board, that’s for sure,” she said.

The advice profession has faced five turbulent years since the royal commission in 2019, having lost more than 12,000 advisers during this period.

FAAA is also focusing on raising awareness of the financial advice profession by engaging with students at universities who are studying adjacent subjects like accounting, economics, or commerce.

“We need to grow awareness of the profession and we need more planners,” Abood said.

Sarah Abood will share leadership insights and tips on how to increase female representation in financial advice at the Women in Finance Summit 2024.

It will be held on Friday, 15 November at The Star, Sydney.

Click here to book tickets and don’t miss out!

For further information, including agenda and speakers, click here.

This summit is produced by Captivate Events. If you need help planning your next event, email director Jim Hall at [email protected]