Accounting, financial advice

Advice barrier to entry needs fixing

AFSL Accountants Financial advice New entrants supervision

A significant influx of accountants into the financial advice sector will not happen unless a fundamental licensing requirement is changed.

One practical issue incorporated with providing advice under a limited Australian financial services licence (AFSL) requires urgent attention if a pipeline of new entrants into the market is to come from the accounting sector, an education provider has said.

In particular, Accountants IQ founding director Bronny Speed identified the supervisory aspect required for new practitioners as being very restrictive.

“One issue I’d like to [highlight relating to] the particular area of getting people into [the provision of financial advice] is [supervision]. Tell me how many people in this room have got 1600 spare hours of time to supervise a graduate coming through?” Speed asked delegates attending the Institute of Public Accountants National Congress 2024 held in Sydney recently.

“It’s a very prescriptive [requirement] … and there are just not a lot of practitioners who have got time to take on a graduate to fulfil those requirements.”

She acknowledged the 1600 hours of supervision associated with the development of a graduate had a substantial cost attached to it as well.

“So we’ve got massive costs [to be incurred for getting people into advice and until the government does something] to help us, I can’t see a lot of [new] people coming into the industry,” she said.

She took the opportunity to suggest a fundamental change is still needed to the wider operation of the advice licensing framework to make it function in a more professional manner that would be more closely aligned with the accounting profession.

“I would still like to see every single person who is on the Financial Adviser Register be responsible for their own actions to become true professionals,” she said.

“[For instance], accountants do not hide behind their business name so I don’t see why anybody who is licensed [should have to] hide behind an AFSL. That’s just a personal opinion, but I think they should be [reporting directly] to ASIC (Australian Securities and Investments Commission) and they should be responsible for what they do themselves.

“If we got to that stage, we would reduce costs significantly.”

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