A growing fear about beefed-up education requirements for new entrants to financial planning is not that the proposed standards body won’t get the hurdles in place before a January 1, 2019, deadline, but that it will.
If the standards body does its job, then all would-be financial planners will need to have an “approved” tertiary degree before they are allowed in to practice. That’s barely two years away.
If the standards body doesn’t move swiftly to ratify the courses that these students have already commenced, then they’re going to get to the end of their studies and have wasted their time – or at least be unable to enter financial planning as a career. And anyone wanting to start studying to become a financial planner will have to start from scratch, creating a three-year lag before the first graduates emerge. That would be a disaster.
On the other hand, if it does ratify the degrees that are already being studied – and let’s not forget that these degrees have been meticulously developed by the Financial Planning Education Council (FPEC) and are administered by FPEC-accredited institutions (universities) – then at least new entrants will continue to flow down the pipeline unabated.
The education rules for new entrants will have a potentially much quicker and more pronounced effect on the growth of planner numbers than the planned education requirements for existing planners, who have until 2024 to get their act together. That’s still more than seven years off, and only the most egregiously apathetic or unfit-to-practice denizens of the financial planning netherworld could possibly fail to upgrade their qualifications appropriately in the time available.
The flipside of the new-entrant, supply-side issue is that it’s fast becoming a seller’s market. And in a seller’s market, buyers sometimes need to tread a bit carefully.
Graduates will be in demand, because the law will say new entrants must be graduates, and there will not initially be masses of them. This is exactly the issue Professional Planner examined in detail in its cover story in May this year, and we described the situation then as resembling a pre-season draft: smart employers are already talking to potential graduates and to universities to improve their chances of picking the cream of the graduate crop before they go into the national draft after leaving university.
My interests include … financial planning
A fair number of the smarter employers are also turning up at things like the speed-networking events run by Alisdair Barr’s Grad Mentor business. Barr scours the nation’s universities, picks the most promising soon-to-be graduates, selects an equal number of potential employers, and brings them together in intensive get-to-know-you sessions.
Professional Planner has been to one of these evenings and was impressed by the calibre of the graduates. When we were invited back for a second chance to have a first-hand look at the quality of potential employees, we suggested to Barr that this time we attend purely as an observer – it’s a bit of a waste of a graduate’s time to be put in front of someone who is not a potential employer.
Barr has a dark sense of humour though, and when Professional Planner arrived at Zurich’s North Sydney HQ for the networking night last month he said we had, in fact, been put on a table for the evening. Registering the look of dismay, Barr added quickly that we’d be sharing the table with Simon Clifford, founder and director of Adviser fp, a financial planning practice based in Parramatta, in western Sydney, that has recently been named the best in the Lonsdale advice network.
Clifford and Professional Planner are well acquainted, but this really was a strange coincidence. We’ve known each other for years, and Clifford’s practice will appear in the ‘24 Hours’ feature section of the December-January edition of the magazine. As a precursor to that, he was featured as the planner profile online on Monday this week. Overexposure, much?
Adviser fp is an enthusiastic employer of graduate talent. It’s employed four so far, three of whom continue to work there. The fourth was found alternative employment within the industry.
The interview process close up
And so it was that we watched the employer-graduate interview process close up. Every five minutes another fresh-faced grad would arrive, and run the gauntlet of Clifford’s questioning, seeking to convince him that they would be a valuable employee, and that a follow-up chat would be worthwhile.
Clifford probed their reasons for getting into financial planning. He quizzed them on their career goals. He picked their brains about their working habits. He explained some of the finer points of entry-level positions and the importance to building a career of being both well rounded and well grounded in all aspects of the advice process and business.
It went like this for the better part of two hours: Clifford interrogating the grads and Professional Planner taking notes and drinking beer – which seemed to be a fair and reasonable division of labour based on both expertise and qualifications. It’s fair to say the notes were better at the start of the evening than at the end.
But nevertheless, at the end of the night there were probably half a dozen graduates that Clifford said he wanted to speak to again. The deal is that any contact after these events is conducted through Grad Mentor, and Grad Mentor also receives a fee upon the successful placement of a grad with an advice business – partly to cover the cost, to which Professional Planner contributed so enthusiastically, of staging the network evenings.
The quality of financial planning students was also demonstrated clearly after spending a day recently watching five teams, consisting of 12 students, competing for top honours in the AMP University Challenge. Any one of the 12 would be snapped up by an advice business looking for smart, keen and ambitious young planners of the future.
So if the financial planning industry faces any problems after the new education standards come into play, it won’t be to do with the quality of graduates who emerge from universities looking for employment. But it could face big problems on the supply side – and that’s why it’s increasingly concerning that even though the countdown continues to the start date for new-entrant education standards, we still haven’t seen the enabling legislation for the standards body.
Parliament resumes sitting on Monday next week and only has eight sitting days before it rises for 2016. It won’t be back until February 7 next year.
The government has previously said it will introduce its professional standards legislation this year. A couple of weeks ago it gave an inner-sanctum one last run-through of the bill. Let’s hope this is a timetable it can stick to.