Demand for financial planning compliance staff has spiked again after reaching peak levels throughout the transition to Future of Financial Advice (FoFA) regulations, according to recruitment firm Robert Walters.
“In 2013 and 2014, we saw a fairly significant amount of hiring in regulatory compliance functions, [as financial planning dealer groups] embedded a framework for FoFA.
“This included everyone, from the big banks setting up large frameworks across their dealer group networks, to the smaller more boutique businesses maybe getting a few contractors in to make sure their policies were up to speed with the FoFA regulations,” says Henry Smith, associate director – financial services and legal, Robert Walters.
While demand for compliance workers may have plateaued as organisations finalised their responses to FoFA, this has been offset by the large-scale remediation programs of a number of financial institutions.
“When that all started bedding down, we then saw probably more work in the big remediation programs, with the likes of the enforceable undertakings (EUs) that were going on around town.
“We’ve seen significant hiring on both project resources, and maybe some permanent roles too, in doing advice remediation work, file reviews, adviser reviews and building large-scale regulatory response teams.
“Then legal teams and litigation teams have been put in place to help with the response to complaints,” Smith says.
The knock-on effect
A shortage of paraplanners has also resulted from the surge in demand for compliance staff. Large numbers of paraplanners shifted roles as salary levels for compliance specialists as much as doubled.
“Interestingly, it made the paraplanning skillset quite attractive … they could leave fairly low to mid-level-paying roles and go into compliance, advice review contract roles, or file remediation teams and make almost twice as much on a contract basis. It then made it quite hard for us to find paraplanners,” Smith says.
The effect of this is still working its way through the financial planning industry. Some firms are thinking more innovatively in adapting to the shifting supply–demand dynamics.
Thinking outside the box
The outsourcing model of paraplanning has proven popular for a number of businesses, particularly the non-institutionally owned Australian Financial Services licensees.
“I believe a lot of firms have done that, and likewise on the compliance side – with Pathways and the like, who offer this sort of outsource servicing, and the consultancy firm, though the premium on this versus building out a team of consultants is quite large.
“Most will use a combination of the two approaches,” Smith says.
While supply–demand issues affect all industries at various times, financial services has not been able to respond by sourcing staff from overseas. For example, the building and resources sectors have been able to leverage offshore workers to meet demand.
“The 457 visa approach is tougher in the financial services space. We’ve had some from the UK [where regulations are similar], but mainly our clients all look for people with Australian regulatory experience and knowledge, and at the very least they need to be RG146 compliant, so that can be a blocker.”
A high level of demand for both compliance and paraplanning specialists is expected to continue into the foreseeable future. The EUs and remediation programs of the Commonwealth Bank, NAB and Macquarie alone have a long way to go before completion, and are sucking up huge resources.
“It will be interesting to see how they transition into the EUs. And the teams still have to increase their EU compliance functions as well.
“We’ve seen a significant uplift in salaries, probably at the 20 to 25 per cent mark, and that’s purely a supply–demand thing.
“The job has become a little bit tougher for them, it’s more demanding and they’re probably working slightly harder. But all it is really is just a supply and demand issue.”
