Financial adviser numbers have not fallen off a cliff as a result of the Future of Financial Advice (FoFA) legislation, according to an Australian Securities and Investment Commission review.
The regulator has released the results of interviews it conducted with 60 Australian Financial Services (AFS) licensees between October 2013 and April 2014. It found that an anticipated exodus of financial advisors, predicted by some industry stakeholders prior to the implementation of FoFA, had not eventuated.
“While some licensees told us that some of their advisers had left the industry or accelerated the date of their retirement because of FoFA, over 90 per cent of licensees indicated that there had been no change in the number of their employee representatives or authorised representatives as a result of the reforms.”
Instead, it referred to findings of “natural attrition” uncovered in a study conducted by Investment Trends, as released last month. This showed 11 per cent of the more than 1,100 planners surveyed had changed dealer groups in the year prior, largely consistent with the 10 per cent figure from the three previous years.
Recruitment trends remain stable
Anecdotal evidence from recruitment firm Robert Walters supports this ASIC finding. According to Ilse Du Preez, financial planning consultant at Robert Walters, demand for staff remains consistent with the period prior to the implementation of FoFA reforms.
“There’s not been a move to candidates looking to go to smaller financial groups. It’s been very consistent overall. Nothing major has changed in the last couple of months, we keep seeing the need for very strong, highly educated financial planners.
“It’s more about finding good candidates [for our clients] than for us finding jobs. It’s a candidate-led market. Big firms continue to bring entry level planners through – such as AMP’s Horizons business, and there is still a need to do that, because there’s still not enough experienced talent in the marketplace,” Du Preez says.
She says institutions also remain keen to grow by acquiring financial planning practices. “Clients will always say to us, ‘if you come across someone that has a book, is well established, has a good reputation, then we will look at them.’ The challenge for us is finding those individuals that are looking to move.”
Salary strength continues
Financial planner salaries have also remained consistently strong in line with demand patterns.
“There certainly hasn’t been a shift backwards in what senior planners can earn,” Du Preez says.
She believes the increasing education standards are likely to further boost salary expectations, particularly for those institutions now requiring university degrees and Certified Financial Planner designations. “Definitely. There hasn’t been a change within the salary banding.”
Robert Walters salary surveys show senior financial planners on average earn between $110,000 and $150,000, while less experienced planners’ salaries are in the range of $75,000 – $100,000. Paraplanners can expect to earn between $50,000 and $55,000.
This poses a challenge for practice principals, particularly among the smaller end of the industry. “It’s been very difficult on the salary front, companies can only afford a certain amount,” Du Preez says.
Griffith University remuneration study
Meanwhile, a landmark research project delving into the structure and quantum of remuneration across the financial planning industry is nearing the end of the data collection phase.
The joint Griffith University and Zanetti Recruitment & Consulting project is the first time the issue has been comprehensively studied, and it will provide insights into how the industry is structured, and details around remuneration for a range of different functions within financial planning businesses.
Griffith and ZRC say the benchmarks will help financial planning businesses to create proactive and structured recruitment plans, review current remuneration levels against national standards, ensure they are meeting minimum remuneration obligations, and stay competitive in the race to recruit and retain the best talent.
The survey closes today, and has received strong support from across the financial planning sector.
