Stephen Glenfield understands the perception that the pipeline of new advisers is too skinny, but the FASEA CEO points out a stark increase in university entrants studying advice, attracted by the industry’s increasingly professional status.
“In terms of the pipeline it’s not just those that have joined today, look at whose studying the FASEA-approved degrees – it’s going through the roof,” Glenfield tells Professional Planner.
In 2019 there were 5,500 units being studied across the 26 universities and higher education providers teaching FASEA-approved degrees, he explains.
“At the end of 2020 there were 16,800 of those units, so that’s basically students studying FASEA-approved degrees with the potential to come to the industry,” Glenfield continues. “It’s showing a large appetite to do those types of degrees.”
With students typically studying four units per semester, the CEO estimates around 2,800 to 3,000 students were studying to become an adviser last year.
“Given that’s within two years of the framework coming to play that’s a positive, and something to build on,” he says.
FASEA has faced its fair share of criticism over the professional year program, with many viewing the requirements as too onerous, time-consuming and expensive for supervising advisers, especially given there is nothing to keep newly qualified advisers at the firm that invested in their development.
“It takes about 20 per cent of your time,” Shaw and Partners senior adviser Jed Richards told Professional Planner in January. “We’re busy enough as it is.”
“I can understand the feeling,” Glenfield says. “This is all new so it’s going to take time to bed down. To an extent people are also operating in isolation so to them it’s a big task to take on.”
The CEO believes that networks of support will spring up around the PY program – something that is already happening with some advice groups. Others have set up a line of communication with schools and universities as part of broader adoption programs to bring young prospects into the fold.
Glenfield also reckons the Financial Planning Association and the Association of Financial Planners should get more involved.
“There’s a real role for the associations in looking at how to help with the PY programs,” he says.
Exam doing its job
The end of Glenfield’s run as the head of FASEA is fast approaching, with 31 December the proposed date for the authority to hand its functions back to the minister and ASIC.
The legislation to enact ASIC’s single disciplinary body plan remains in front of the senate, but the CEO says FASEA is already working with Treasury and the regulator to ensure a smooth transition.
Reflecting on what the education mandate has achieved, Glenfield says the adviser exam has done doing exactly what the Corporations Act amendment enabling the reforms designed it to do.
“The exam came about to give the relevant providers what they should know and identify those that didn’t,” he says. “It’s been a credit to the industry, and it’s done its job in identifying those that weren’t up to standard.
“If the pass rate holds up we’re looking at about 18,000 qualified advisers by the end of the year, and then the government’s intention is to run more exams next year which should lift that number up further.”
The increasing number of second sitters in the later exams will probably see the numbers fall slightly short of this, but Glenfield’s point still stands: 88 per cent of advisers who have sat the exam at least once have subsequently passed, so it’s fair to say the exam’s done its job.
While Glenfield won’t say whether 88 per cent is what he expected (“I never had any expectations,” he insists), he does admit to being “pleased” with where it’s sitting.
What wasn’t expected is the glaring anomaly that only 14,070 of the 16,030 advisers that have passed are on ASIC’s register.
Glenfield attributes this to a number of things, the most obvious being a “fundamental restructure of the industry” as the institutions left advice and jobs dried up.
Some displaced advisers have done the exam while they consider coming back into the industry, he notes, and others that have passed are actually compliance managers or responsible managers.
“There are also some exiting but some might come back,” he says.