Higher PY participation will underpin adviser (and client) renewal

Attracting and retaining talent is not easy. Even before the current battle for talent, it was hard. Now it’s practically impossible, especially for small-to-medium enterprises that don’t have large recruitment budgets, strong brand recognition and an arsenal of perks.

Desperate businesses are being pushed to settle for good enough as work piles up, but poor hiring decisions often create problems down the track including lost productivity and low team morale. Business leaders understand only too well the pain of managing unsuitable people.

All this strengthens the case for developing talent in-house, particularly young advisers. An obvious way of doing this is to offer a Professional Year program.

While taking on a PY candidate can be challenging, it is also extremely rewarding. As the expression goes: nothing worth having comes easy.

Advice businesses must provide a range of advisory and support role experiences to help participants develop the professional competence to provide financial advice. Within a 12-month period, participants must complete at least 1500 hours of work activities and 100 hours of structured training, under the supervision and mentorship of a senior supervising adviser.

And despite being called a Professional Year, the time commitment involved in developing and nurturing talent extends far beyond 12 months. It spans the years before commencement, when a person first joins an organisation, typically in an administration, paraplanning or client services role.

It includes the years after completing a PY, when businesses facilitate ongoing training and development. Senior advisers often play a rainmaker role, progressively handing over clients to a PY graduate. This creates a career path for future leaders including promotions, pay rises and equity participation.

The process requires patience, perseverance and flexibility from both parties but those that stay the course, stand to reap enormous benefits. (In my experience, people overestimate what can be achieved in a year and underestimate what can be achieved in a decade.)

Home grown talent is typically easier to manage and more loyal because they have been mentored by senior colleagues and feel a strong connection to the business. They intimately understand their organisation’s vision, strategy, priorities, processes, systems and culture.

They have been given unique opportunities to gain the skills they need to succeed, which boosts employee satisfaction and retention. Many have been promoted to their current role or have had roles created specifically for them.

Overcoming fear of the unknown

When the PY concept for financial advisers was first flagged by the FASEA in 2018, there were concerns the requirements would be too onerous on supervisors and the cost of employing a non-income producing provisional adviser would be burdensome and prohibitive for advice businesses. However, since 2019, it has become accepted as in integral part of the industry’s journey to professionalism.

Hundreds of advisory businesses, including Eureka Whittaker Macnaught, have guided provisional advisers through their PY. As demand for advice accelerates, many more are likely to participate.

While some advisers maintain they don’t have the capacity to invest nor are they prepared to mentor someone and risk them leaving shortly after, it could be argued that businesses focused on long-term growth can’t afford not to invest.

Losing an employee that you personally hired, trained and believed in is rough but so is losing someone shortly after a comprehensive recruitment process. Both are part and parcel of running a business.

While hiring someone with ready-made skills who can hit the ground running and start billing immediately is extremely advantageous (if you can get such a person), those rare people are in high demand and susceptible to being poached.

To mitigate risks, businesses should adopt a long-term, multi-faceted approach to talent acquisition. Building a workplace, as opposed to solely buying it, makes good commercial sense. Giving internal candidates additional responsibilities and the chance to step up, makes them feel valued, which increases employee engagement, job satisfaction, productivity and tenure.

Longstanding employees provide clients, referral partners and other internal and external stakeholders with continuity, confidence and a better overall experience. A people strategy that focuses on building can also reduce recruitment and training costs.

Furthermore, businesses with a track record of internal promotion are extremely attractive to external candidates; an advantage that can’t be underestimated in the current environment. Then there’s the matter of succession. Someone who has come up through the ranks and proven themselves over time is a prime candidate to buy equity and succeed senior leaders.

Yet, the industry seems more invested in the past than the future.

Treasury’s proposed experience pathway epitomises the effort being made to retain older advisers indefinitely, but greater attention must be given to attracting talent, which is arguably a much bigger issue. For the good of society, the industry’s focus must shift to renewal.

At a practice level, renewal is about refreshing a company’s strategy and bringing on new clients and staff to account for natural attrition and introduce fresh ideas. At a macro level, it is about improving the profile of the advice professional, strengthening the industry’s reputation and ensuring enough supply to meet demand.

Financial advice is a great career and it is the responsibility of senior leaders, alongside our professional associations, to spread the word and raise up the next generation.

Greg Cook is the CEO of Eureka Whittaker Macnaught and a certified financial planner. Since 2019, EWM has supported four PY participants.