Matching younger clients and advisers could help reduce the advice gap for millennials and Gen Z by having planners start out by giving limited advice.
Speaking at roundtable hosted by Professional Planner, AMP Advice managing director advice Matt Lawler said there should be a push for younger people to come into the sector to deal with clients.
“Even if it’s a restricted level or around clients in their age group dealing with insurance or budgeting,” Lawler said.
“This is a good time for us to say how do we give younger entrants the opportunity to start earning revenue earlier because it is very difficult for a young person to earn a $4000 to $5000 fee, but what they can do is talk to younger people about simple things like salary sacrificing into super or investing smaller bits of money.”
Lawler said in the proposed regime they would not have to deal with the full Statement of Advice process and only instead give smaller pieces of written advice.
“…And charge smaller fees – a couple of hundred dollars or a thousand dollars – as opposed to the current regime which is a premium model where it’s all or nothing and a lot of younger people are missing out.”
Lawler said having thousands of people exiting the profession but only a few hundred entrants has created a huge supply gap.
“We’re at an inflection point – post-Royal Commission there were lots of rules and regulations being imposed on the sector which was making it economically unsustainable,” Lawler said.
“At least we’re now getting some discussion. We have good dialogue with [Quality of Advice Review lead] Michelle Levy and her team about unwinding some things that don’t make sense for a profession that has all the belts and braces that we have now.”
Levy will hand in her ‘good advice’ proposals on 16 December with few changes. Lawler previously told Professional Planner his dealings with Treasury created optimism the proposals would be picked up.
“Some of those changes can have an impact on younger people coming into the sector and starting to build businesses and make it economical for the practices that sponsor them,” Lawler said.
Personal experience
Invited to the roundtable was Holly Rohrlach who is seven months into her provisional year at Profit and Retirement Planning.
“It’s called a baby adviser in our practice here,” she said.
Originally, she planned on becoming a veterinarian which she noted is “a vastly different career” than financial advice but had a change of plans during her gap year.
“I started working at PRP as a receptionist and really enjoyed working here,” she said.
“Within about two months of being a receptionist here, I decided to do a degree in financial planning through Open Uni Australia. I started working as a paraplanner as well. I ended up studying full time while I was working full time.”
The firm was not a random landing spot as her mother and her mother’s partner worked at PRP.
“He was always a role model for me, and I enjoyed the work he did,” she said. “I didn’t know too much about what an adviser did until I started working at PRP.”
Not enough Hollys
While Rohrlach is a welcome addition the industry, the fact she joined because she had family working in the industry shows why the profession needs to promote the benefit of being an adviser.
Alisdair Barr, founder of Striver, which has done as much as any other firm to promote the industry and encourage new entrants, said there has been no growth in the number of students studying the approved degrees.
“I think there were 300 people that graduated with an approved degree last year, while there were 216,000 across three and four years doing commence and management,” he said.
He added the stigma around financial advisers is not what is holding back Gen Z from joining the profession.
“There’s not a university student that I speak to that was watching the Royal Commission on their phones like the rest of us were,” he said.
“I don’t think we’ve done a good job of promoting the opportunity for flexibility and the impact and purpose the profession has.”
Griffith University commence program director and senior lecturer Kirsten MacDonald said young people gravitate to professions they have first-hand experience with and pointed to doctors, dentists, lawyers and other professions that are common in media or encountered in daily life.
“They’re not being exposed to what does a financial adviser does,” MacDonald said.
“They’ll tell you they want to support people, they want to help people in different ways. One of the critical things we can do is start to get them aware of their options early, whether that is at universities or schools.”
360 Financial Strategists director and financial adviser Billy Amiridis said the people exposed to financial advice understand the value, but it is still not broadly understood across the country.
He added the Quality of Advice Review showed the industry cannot even get the definition of advice right.
“We keep tossing up between playing with ‘good advice’ and tinkering around the edges,” Amiridis said. “Until we can fix that en masse, we’re going to struggle as an industry.”
FPA head of member services and head of education Joanna Matthews said prior to the regulatory changes the profession was lucky to attract career changers and train them.
“What we’re now seeing is because of the approved degrees there’s a strong need to start exposing students in high school to financial planning and what it can do and achieve,” Matthews said.
Location and background
Jade Financial Group director Dianne Charman said recruiting in regional areas like Ipswitch, Queensland, is a challenge. “It’s not as glamourous as a CBD practice,” she said.
“The Covid-19 impact made people want to move to regional areas which has led to interest when I’ve been recruiting for a couple of positions.”
She expressed disappointment with recruitment agencies that told her they “won’t be able to sell” that position because of the location.
“Our community is a vibrant community and a growing community,” Charman added.
Kofkin Bond & Co group CEO and director Tony Kofkin said his firm has found success by recruiting outside the industry.
“Our greatest success has not been from recruiting existing advisers with some experience but actually recruiting outside the industry and showing a career pathway depending on who they are,” Kofkin said.
Two were recruited from commerce backgrounds and only had four subjects to get a graduate diploma. The third has a master’s in taxation, but one more had to do all eight subjects; he was ex-defence force and didn’t have a relevant degree.
Kofkin said so far, he had lost only one adviser.
“He had been with us for five years,” Kofkin said. “In fairness to him I know very well, he’s actually my eldest son. Josh is a magnificent adviser but he wanted to go out and experience somewhere where he could walk into an office where his father’s name wasn’t on the door.”
Kofkin added that he encouraged his son to stay in the industry but was happy for him to explore the professional world.
“We paid for his education all the way though as we do with our advisers,” Kofkin said.
Eureka Whittaker Macnaught CEO Greg Cook said his firm approaches provisional advisers with a “100 per cent commercial view”.
“We hoped the candidate that we put through the professional year would stay with us for a number of years, but if they didn’t… we wouldn’t be looking back on it as a loss leader experience,” Cook said.
He added mentorship goes beyond the completion of the professional year.
“Just because someone signed off on their professional year, doesn’t mean they’re suddenly experienced in all situations that can occur with a client,” Cook said.
University challenge
AMP has hosted the University Challenge to give students a chance to showcase their advice skills and learn about financial planning.
AMP advice partnerships general manager Sara McQueen said the idea behind the challenge is to place the focus on advice as a career.
“Through successive years, we’ve had some 500 entrants into that challenge,” McQueen said.
“This year it was around the value of advice and they could put through a submission and work as individuals or in teams.”
The finalists are invited to Sydney to participate in a case study challenge.
“They’re given a scenario and it’s a roleplay challenge of what a client’s situation might be,” McQueen said. “[They were] asked on the day to put forward what the recommendation is and go through the advice process there and then.”
She added several course directors of financial planning at Australian universities use the University Challenge to demonstrate what a career path in financial advice looks like.
“AMP is investing in the University Challenge to make more university students aware of what a great profession financial advice could be for them as a choice for when they graduate,” McQueen said. “This is good, not only for AMP, but for the financial advice profession as a whole.”
