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.

The review to end all reviews

How the experience pathway will come to fruition is still unknown, but there is a strong possibility it will be included in an already bloated Quality of Advice review.

Who will lead the QOR is a mystery, but Hume said an announcment was “imminent” and the review will be open to the public.

“Once the terms of reference are out there, we want to hear feedback from everybody,” Hume said.

The review will identify “sensible opportunities” for deregulation with the removal of safe harbour provisions and simplification of statements of advice being likely focus areas.

“The quality advice review under the Morrison Government will go back to basics,” Hume said. “Regulation always has a cost associated with it, so we have to weigh up the cost of regulation against the benefit that it provides.

“Complex regulations mean businesses spend more time thinking about regulation than actually doing their job and I think financial advisers know this more than most.”

Hume compared to the growth of the industry that moved away from sales into a profession in the same way health food gets branded.

“We’ve now got trusted professionalism, essentially that heart tick of approval on accredited and licensed financial advisers,” Hume said.

With an election in May and the latest Newspoll-YouGov projecting a Labor victory, Hume is still confident she will be around in the same role.

“Of course I’m going to be minister in May,” Hume said. “I love this job and I never want to leave it – I’m going to haunt you at conferences for many years to come.”

One comment on “‘Simply not enough’: Hume acknowledges thin adviser pipeline”
  1. Avatar
    Jeremy Wright

    Jane Hume knows the Adviser exodus and minimal new Adviser entrants is a massive problem and she is willing to listen to constructive advice on how to fix it.
    The problem is that there are so many conflicting opinions that in theory, sound fine, though in the real world, will not work.
    Why is that so? The answer is that the very people who are the basis of all this discussion, “Advisers,” have been buried under the unworkable maze of Regulation, designed by vested interest groups that has led to the current mass exodus and as per the numbers, lack of interest for new Advisers to join the Industry.
    All they see is red tape, higher costs and higher risks everywhere they look and the very real fear of ASIC who has a heavy hand when it comes to infringements and the utilisation of millions of words they have as a weapon from their arsenal.
    Perception is more tangible in peoples minds than a mish mash of legalize facts that no-one understands, hence the reason for Licensees and Advice Practices veering on the side of caution and needing to increase fees and reduce perceived risks.

    The advised Life Insurance sector has been severely impacted and the only solution to make it attractive or viable for new entrants and experienced Advisers to write Insurance and rebuild the numbers, is to separate Life Insurance advice from Investment advice and give risk advisers the ability to focus just on the work they do, without all the additional and irrelevant studies that costs more and increases the perceived and real risks which is the reason why we have seen such a devastating decline in Insurance advice and Advisers.
    Put simply, to be an Adviser is perceived by newly degree qualified graduates as too much work and risk for too little reward and for experienced Advisers, risk advice falls into the same bucket.
    Jane Hume and the Government need to listen to the REAL truth and take action that will make it more attractive to want to be an Adviser, or as in the case of Life Insurance Advice, there will be a continual decline.

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