The chief executive of the Financial Planning Association has detailed an urgent need to address the supply of advisers, with the onus on policy makers to adjust the settings that are precluding young people from coming through the ranks.
Speaking on a digital panel at Professional Planner‘s Best Practice forum Tuesday afternoon, De Gori said that while the financial advice industry has a “very positive future” with the demand from consumers “only increasing”, the current entry settings aren’t conducive to getting talent into the pipeline.
“We get this running tally on the financial adviser register, pretty much on a daily basis,” De Gori said, “and we see where it’s up or down for the day.”
The current tally of around 19,300 advisers is below the 20,000 advisers on ASIC’s register when it was first published in 2014, he pointed out.
Considering the population increase since 2014, De Gori said the result is that, “if everything else stays the same, we’re serving less Australians than ever before”.
“Where are the adviser numbers going to end up? That’s anyone’s guess, but my gut feel is that we will probably get down as low as 16,000, 17,000, possibly subject to the end of these exams.”
A stagnant inflow of talent, he said, was the issue that needed to be addressed.
“We do have a fundamental policy problem, then,” said De Gori, who the day before announced he would be leaving the FPA after six years in the top job.
“Where is the next generation coming from? That is the big challenge.”
Not just product floggers
Also on the panel, Metlife Australia head of advice strategy Jeffrey Scott made the point that the advice profession should be proud of its turnaround in recent years, and should take every opportunity to promote itself to young aspirants.
“What we’ve done over the past few years [is] we’ve gone from being a product-led industry to now being an advice-led profession, and I think the first thing is we need to start changing the image – we’re not just product floggers,” he said.
Scott referenced Benjamin Short, “the very first financial adviser in Australia”, who sold life insurance products back in 1860, to show how far the industry has come.
“We’ve now got independence and boutiques for advisers, who are busy aligning [with] no vertical integration, no vertical alignment, and their job now is to provide appropriate advice and the product comes up,” he said. “And that to me is what a profession is all about.”
Scott reiterated De Gori’s concern, however, that not enough young advisers are coming through the ranks. Of particular concern he noted, was the amount of students that start studying financial planning but drop out along the way.
“Over the past two and a half years… 400 people decided to come into financial planning and study it as a profession, and then the number of people who actually made it through to the professional year was only 94,” he said.
“And so what we have is we have this disconnect between people coming in and thinking this is great, and then along the way they decide to go study ancient history, not financial planning. In the end then go into something else.”