Harry Baker had his eye on completing FASEA’s professional year before the requirement even became a part of the Corporations Act.
“I was thinking about it all the way from university,” he says. “Even though it wasn’t official, I knew it was coming and started doing extra study.”
The 25-year old was the first to sign up for FASEA’s professional year (PY), and after completing the 1600 hours of required training and passing the adviser exam, FASEA has confirmed Harry as the first adviser to qualify under the new regime.
The achievement has also earned Baker a nod from FASEA CEO Stephen Glenfield, who congratulated him on being “first among a vanguard of young professionals entering financial advice”.
“The framework, education and mentorship component of the PY program really helps to enable young advisers like Harry to begin their careers on a strong footing,” Glenfield tells Professional Planner.
Baker admits there were a few hitches along the way. Being late to register for one of the exams meant the 12-month program took 15 months to complete, and a change in licensees for his employer, Eureka Whittaker Macnaught, threw another spanner in the works.
Baker also moved from the Sydney office back up to his native Queensland during the year, which meant switching mentors – or ‘supervisors’ in FASEA parlance – from industry veteran Greg Cook in Sydney to Sally Bell in the firm’s Queensland office.
The country’s newest financial adviser says it “feels good” to be qualified, and gives credit to both Cook and Bell for guiding him through the process. “They’ve both been great,” he says. Baker is now in the process of taking on the clients of retiring adviser Peter Mill, who Baker worked alongside 4 and a half years ago in his initial client services role. “A lot of his clients already know my name,” he says.
For Cook, who has been instrumental in driving Baker’s development, the PY has also been a learning process. “The supervising is a new thing for us as well,” Cook says.
More out than in
The significance of Baker’s qualification has a lot to do with the current state of the financial planning industry.
Many advisers are leaving the industry due to tougher education standards, a bruising Royal Commission, the institutional exit from advice and a raft of ensuing regulatory changes that have put the squeeze on margins. From a high of 30,000 in 2018, the number of advisers is now about 24,000 and predicted to drop a lot further.
Few are lining up to replace these advisers. According to HFS Consulting director Colin Williams the number of ‘provisional advisers’ currently on ASIC’s register is 28. Licensee Count Financial has three, six other licensees have two and several other licensees have one.
Williams says the retreat of the institutions, in particular, has stemmed the flow of trainees and put the pressure on smaller licensees to bring in new advisers.
“Banks, and to some degree AMP, were often seen as a nursery for new advisers,” Williams says. With the banks effectively out of advice and AMP under significant pressure, it is hard to see which licensees will have the deep pockets to produce the new advisers.”
Many of today’s advisers started their careers at the big banks, he continues. “A lot of advisers cut their teeth there and that’s gone now. It creates a massive hole in the development of new advisers.”
Some may have thought that the big industry super funds could have expanded their adviser teams as the banks dropped out, Williams notes, but this has not occurred. In the first half of 2020 the number of industry fund advisers dropped over seven per cent from 1,105 to 1,024.
According to Alisdair Barr, whose firm Striver matches graduates with advice and accounting businesses, the industry needs “500 to 600” new entrants each year to fill the gap. Part of the problem, Barr reckons, is that students don’t even know the job exists.
“Today I’m in front of 400 business degree students at Western Sydney University and there might be 20 that actually know financial planning is a career,” Barr told Professional Planner in 2019.
A great opportunity
There are still advice firms that – with the support of their licensees – are willing to put resources behind new talent.
Nurturing advisers is an investment, EWM’s Cook says, and one they’re happy to make. But the nature of the professional year means there is also nothing stopping Baker from going elsewhere once the training is finished.
“It’s not like the old days where it’s a structured indentured apprenticeship,” Cook says.
Baker says he’s thankful for the support of his employer and licensees. Fortnum in particular, he says, helped a lot with the structure of the training. The young adviser is keen to pay it forward; along with conducting handovers and setting himself up as a working adviser Baker says he fields calls and emails from other prospective advisers looking for tips on the PY.
“I’ve had a few people reach out,” he says. “Someone I went to uni’ with messaged me this morning actually, asking about the process,” he says.
Williams reckons the Harry Bakers’ of the world are onto a good thing. The advice industry’s stock may be down now, but that won’t always be the case.
“Anybody who is an entrepreneur would look at this and think it’s a great opportunity,” he says. “Now is the time to jump in and take advantage.”