As the industry continues to lose advisers, the issue of replacement might not come down to interest from the next generation of talent, but rather the industry’s capacity to develop it.
The most recent numbers from Wealth Data found a net loss of 49 advisers for the week to 20 January 2022, in addition to over 600 that have left since December which has brought the total number of advisers on the ASIC FAR to 17,621.
Replacement numbers have been low with only a few hundred having completed or attempting a professional year, but Marisa Broome, FPA chair, says the association now has over 1,000 student members.
“We know we have this pipeline of people wanting to come, but the difficulty is finding jobs for them,” Broome tells Professional Planner.
“To take on a graduate is an enormous investment… and practices at the moment have such demand for their services that I don’t know of a lot of people who have capacity to take on extra people.
“I have had more enquiries in my own personal business in the last two years than I have in the past 20, so demand is enormous.”
Not having the capacity to train new talent is expected to be a common refrain from business owners who are left to figure out how to best allocate their finite resources.
“We know there’s an important pipeline and we need to bring new blood in, it’s just a balancing act at the moment for a lot of businesses,” Broome says.
Dave Carney, Virtual Business Partners chief executive, says the industry can no longer rely of the traditional model of recruiting from the banks and large institutions.
“What we’re seeing is that people really need to change their thinking around that and not repeat the way careers were developed over the last 10 or 20 years,” Carney says.
Based on his dealings in the industry, Carney finds that while the competition for talent is extreme, firms don’t have the infrastructure in place to attract, retain and develop talent.
“A lot of people are leaving the industry and no one’s really developing new talent so the competition for talent is quite challenging,” Carney says.
“The firms that we deal with are in desperate need; they’ve got more business than they can write, but their biggest challenge is ensuring they have the right mix of people.”
Carney says scale is important and businesses that sit around $2 million in annual revenue will need to push to the $5 million threshold to be able to put the infrastructure in place to help support and develop talent.
This means smaller offices will likely need to expand their middle offices as part of that development, before they are ready for client facing roles.
“A lot of activity that is happening in that space is where firms are merging, growing and looking at that part of the succession,” Carney says.
“That’s often been a gap in smaller businesses so that’s a trend that needs to play out so we can have true career development for advisers.”
Numbers ‘don’t stack up’
Alisdair Barr, founder of financial adviser networking and recruitment firm Striver, says there needs to be 2,500 to 3,000 people coming into support and customer services roles who have education baselines.
“We can’t take people who don’t have a tertiary education, they have to at least have a tertiary education because that’s the baseline,” Barr says.
“Last year there were 300 people graduating with an approved degree out of an Australian university, of which about half of them made their way into the financial planning profession.
“The numbers just don’t stack up, so we spend a lot of time raising awareness of financial planners as a career path to a broader set of students that need to bridge the education gap before they can enter the profession year.”
This was important as the time it takes to get a graduate into a client-facing role can take up to five years.
“The time it takes to take an undergrad into a financial planning firm… when they start in a financial planning firm it tends to be three to five years before they put them in front of a client,” Barr says.
“The professional year will be T-minus 1, so it’s two to four years before they’ll enter the professional year.”
Barr says the industry will have to fight for its “fair share” and continue to make the profession desirable to continue to attract new talent.
“In every element globally, that 24- to 45-year-old set of talent is just fought over in every industry and profession,” Barr says.
“When the professional year came out everyone thought that would be fine, but there’s not enough coming into universities who know about financial planning.”
I disagree. Almost nobody applies for the roles, even through recruiters. Maybe we need to get better at aligning jobseekers to employers.
That has not been my experience, on a weekly basis we receive written enquiries from students.
I would have thought this is an ideal opportunity for the FPA to make this a centrepiece service to members. I would also expect the member and their firm would pay for it. There is a difference between helping people/providing resources vs a properly resourced service. This already occurs with CFP and I would argue this is now more important.