Should the government give advice firms $10k to hire PYs?

Given its activity in highlighting concerns around the way regulatory levies are impacting advisers, it is unsurprising that the Financial Advice Association Australia (FAAA) dedicated part of its 2025-26 pre-budget submission to arguing that the ASIC levy need to be lowered and the Compensation Scheme of Last Resort (CSLR) must be overhauled.

However, a new proposal from the association is for the government to step in and provide assistance that could help incentivise advice practices to bring on professional year (PY) candidates and subsidise the cost of the financial adviser exam.

In a move that the FAAA said would help address the “growing demand for qualified financial advisers and ensure the sustainability of the advice profession”, the submission called for up to $10 million in government funding for PYs.

“We propose that the government make a payment of $10,000 to each financial advice practice that appoints a PY candidate,” the FAAA said.

“The PY is a mandatory requirement for new entrants, offering practical training and mentorship. However, its costs, born by both applicant and employer, often act as a significant barrier to these positions being offered.”

Adding that there was only around 500 new advisers joining the profession last year, and the training ground of large institutions is no longer an option for bringing on advisers, small businesses require support to increase that number.

“Often it is a struggle for these businesses to afford the cost to employ PY candidates, particularly when they face the risk that they will move elsewhere once having completed the program. Support for these small businesses to enable them to employ PY candidates would enable more places to be offered,” the FAAA said.

“We recommend that the government provide subsidies to support PY positions, enabling advice practices to employ more PY candidates. An appropriate subsidy, aligned with at least what is being offered for apprentices, would ensure more roles can be offered, while maintaining professional standards.”

It suggested that with a cap on the scheme of 1,000 places, the cost to the government would be “minimal” at no more than $10 million while doubling the number of new entrants each year.

However, PY costs are not the only barrier the FAAA wants to reduce, also pointing to the financial exam as a significant hurdle for new entrants.

“At the current cost of $1,500, this is a substantial expense for a new entrant and one that is excessive considering the recent changes to the nature of the exam which have made it cheaper to run,” the submission said.

“These fees impose an unnecessary burden on candidates already navigating the costs of education and professional development and are a disincentive for qualifying candidates to pursue the financial advice profession, when other options carry no upfront costs.

“We believe this initiative will foster a steady pipeline of well-trained advisers, which will in turn assist with increasing the affordability of financial advice for consumers.”

The FAAA’s publication of its proposals follows the launch of its campaign targeting career changers.

The new initiative, the FAAA said, aims to appeal to people seeking new career paths by “highlighting how they could be better off pursuing a career in financial advice”.

According to the association, the campaign will primarily focus on social media to reach potential career changers, informing the target audience about the training requirements to become a financial adviser and how they can transition careers.

"We believe many people are at a point in their careers where they want to make a real difference, and the financial advice profession offers that opportunity,” FAAA chief executive Sarah Abood said.

“Professional financial advice changes lives for the better, by helping Australians to build a more secure future, enjoy a higher quality of life and experience less financial stress.

“This campaign encourages people from all walks of life to consider financial advice as an attractive career – one that offers the opportunity to build lasting client relationships and have a positive impact on people’s financial futures, while enjoying career growth, autonomy and strong demand for their services.”

ATO portal access and tax deductibility

In its budget wish list in May last year, the FAAA pushed for, among other things, access to the Australian Taxation Office (ATO) portal for financial advisers and improved tax deductibility for advice.

Little has changed in this regard, with the association’s submission again calling for the ability to access the “essential client tax information they need to do their jobs” through the ATO portal.

“Accurate, up-to-date information, including taxable income, superannuation balances and contributions, is crucial for preparing, implementing and maintaining financial plans that serve clients’ best interests,” it said.

“Currently, financial advisers often face delays and additional costs due to the need to source this information from accountants or individual superannuation funds, as clients themselves may not possess these critical details.”

The FAAA noted that the Treasury consultation paper, Review of tax regulator secrecy exceptions, has opened the possibility of advisers gaining access to the portal.

Indeed, Treasury noted that advisers currently rely on clients to provide the information contained in the portal through “less secure channels”.

“Financial advisers are responsible for the accuracy of information provided by their clients. Streamlining financial advisers’ access to ATO-held client information provides the opportunity to utilise more complete, accurate and timely data which may reduce the cost of advice by lessening the administrative burden,” the consultation paper said.

Beyond this, Treasury has conceded that there are additional benefits around accessing superannuation information, given the total superannuation balance and transfer balance cap affect what contribution and pension rules apply for an individual.

“Financial advisers need to have accurate information so that they can ensure clients comply with these legislative requirements,” it said.

However, the paper raised a number of issues related to cyber security, implementation costs, unintended or pressured access and whether timeliness of data would be assured.

According to the FAAA, by enabling this streamlined process, the government would “reduce unnecessary delays and costs, ultimately supporting better outcomes for Australian consumers seeking financial advice”.

Similarly, the association argued for a simpler tax deductibility regime for financial advice, arguing that despite the release of the ATO’s finalised determination in September that expanded deductibility, it remains “complex”.

“FAAA has argued that upfront financial advice should be deductible, to the extent that it relates to generating assessable income, rather than classified as being of a capital nature. In most cases this advice relates to advice on existing investments, not just the deployment of cash sitting in a bank account,” the submission said.

“Further, there should be no limitations with respect to the deductibility of advice fees related to new investments that add to an existing portfolio which is generating assessable income. We propose a standard approach, that all financial advice from a licensed professional with respect to the establishment and review/monitoring of an investment portfolio that generates assessable income, should be deductible to the client.”

According to the FAAA, this proposal would “significantly reduce the level of complexity for consumers and advisers”.

“Whilst we continue to advocate for the broader deductibility of financial advice, we recommend, as a short-term measure, that the government enable initial advice with respect to an assessable income generating investment portfolio, to be treated as tax deductible,” it added.