The lack of new entrants into the financial planning industry is a major concern and should be addressed in the Quality of Advice Review, according to the Association of Financial Advisers (AFA).
As part of its submission to the federal government’s Quality of Advice Review, the AFA said the lack of new entrants was “one of the greatest challenges confronting the financial advice profession”.
“There are a range of factors, including the perceived reputation of the financial advice profession, the education standard, the availability of courses and the appetite of practices to employ new entrants and put them through the professional year,” the industry body stated.
“We would like to see this issue carefully analysed to assess what more could be done, including potentially through rationalisation of the professional year requirements or through government support of new advisers (akin to apprenticeship programs).
“We acknowledge that the government is separately dealing with the issue of the education standard for financial advisers, which we consider to be appropriate. Another consideration with education is the issue of specialisation and the need for education and experience to support practice in that area.”
It also called for an end to regulatory uncertainty for licensees and financial planners in regards to how standards are applied in the present and into the future.
“Licensees are uncertain, with respect to what the regulators may expect and whether their processes will meet not only the standards that apply now, but also the standards that may exist in the future when the actions of today might be assessed,” it said.
“The obvious example of this is with respect to ‘fees for no service’, where licensees and advisers are being assessed in terms of record-keeping on the basis of standards that apply now and not what was in existence 10 years ago. Efficient processes are often based upon a clear, sector-wide understanding of regulatory requirements that can be relied upon.”
It also suggested a “process re-engineering review” to analyse each step in the advice process and how costs to clients could be reduced without minimising the value of activity professionals offer.
“An example of such a regulatory requirement is the financial services guide (FSG), which may have been more important in the past, given conflicted remuneration and a market typified by significant vertical integration, however, the market has changed and conflicted remuneration has largely been banned,” it said.
“It is appropriate to ask what is the utility of an FSG for advised clients now, especially given other disclosure documents which are provided to clients.”
