Advisers at Shaw & Partners in Adelaide question the efficacy of FASEA’s professional year and the ability of the arrangement to adequately incentivize smaller firms to take on fresh talent.
The professional year, which requires advisers to oversee 1600 hours of training – 100 of which is structured – to ensure trainee competence in technical aspects and client care, as well as regulation, professionalism and ethics, has been criticised as being too onerous and expensive for smaller advice practices.
According to Shaw and Partners senior adviser Jed Richards, the PY has merit but can be an onerous commitment for advisers. “It takes about 20 per cent of your time,” he says. “We’re busy enough as it is.”
Richards and his colleague, fellow Shaw adviser David Dall, currently have shared oversight of an associate adviser that’s “progressing well”. Yet paying for an employee that isn’t authorised to advise clients or take orders amounts to a business inefficiency, they say.
“It’s very much a training role,” Richards says. “There’s not a lot they can do so it’s very much an educational role that they’re being paid to complete.”
“It’s such a hit to an adviser’s bottom line to put someone through that training and give someone a massive leg-up in their career,” Dall adds. “If I wanted to go to Harvard and do an MBA I’d have to pay for it.”
Both advisers agree that building a pipeline of young advisers is crucial to the future of the industry. But the way things are structured, Dall says, there is nothing to stop PY advisers moving onto another firm once they’ve been qualified, which makes training them a risky investment.
“It becomes an at-risk asset, because once they’re qualified they can just do the horizontal shuffle for another 20 or 30 grand,” he says. “Then the original firm has to start again and reset the clock.”
No more deep pockets
With the institutions largely out of advice, smaller advice businesses are less able to accommodate the time and cost expense of training, Dall says. “The banks would have paid their salary and had professional development departments that ran the training modules,” he says. “That’s not something that we’re seeing any more because boutiques don’t have the capital behind them.”