Jane Hume

The government has given its strongest indication yet the experience pathway is designed to compensate for the steep loss of advisers, with financial services minister Jane Hume calling the pipeline for new advisers “thin”.

Previously, the minister said it was not necessary to “stem the bleeding any further” as adviser numbers would stabilise post the 2021 exam deadline at Conexus Financial’s ‘The Policymakers’ View on Financial Services in 2022’ webcast in January, while also disputing the experience pathway would water down professionalism.

Hume said “we always knew there would be people leaving the industry” and instead shifted the focus onto the need for more new entrants to advice.

“The real question is how do we make sure we can bring that next cohort through, so we have a dynamic industry that is replenishing itself,” Hume said.

However, at the 2022 AIA Adviser Summit Hume said “it’s no secret” the pipeline for new advisers is thin.

“Only a few hundred have completed the professional year,” Hume said. “In 2021, only 300 people graduated with a FASEA-approved degree from an Australian university and only half started their careers as financial advisers.

“That is simply not enough.”

Hume praised the Financial Planning Association for reaching over 1,000 student members but admitted that the association’s contribution was not sufficient for the industry to replenish numbers.

The amount of licensed advisers remaining in the industry is approximately 17,282 according to ASIC’s register; previous announcements including the extension of the education deadlines and a further exam extension for September have been attributed to preventing the industry from falling to 15,000-16,000 advisers.

Hume said the experience pathway would minimise education requirements to ensure “high quality advice” is available to consumers.

“This will achieve the intention of the FASEA reform without micromanaging advisers, universities or students,” Hume said.

“It creates a huge pressure on the pipeline of new entrants and its essential we attract the best graduates possible to the financial advice industry.”

Similarly, the proposal to include a broader range of bachelor degrees was also to improve adviser numbers.

“We want to increase the size of the pool that businesses can select new advisers from,” Hume said.