Australia’s 15,709 financial advisers welcomed 144 new recruits to the industry since July, according to latest Wealth Data. But some small firms remain hesitant to bear the cost of hosting a professional year (PY) adviser, who must work 1600 hours and receive at least 100 hours of structured training, before they are accredited.
Australia’s largest financial advice network, AMP, has supported more than 27 candidates each year since 2019 and currently has 55 active professional year advisers, a spokesperson said.
On the flip side, small to medium-sized firm Eureka Whittaker Macnaught, the first firm to employ a professional year adviser in 2019, now uses the supervision period as a recruitment tool, says chief executive Greg Cook.
In Harry Baker EWM had “the first-ever PY person in Australia, in 2019”, Cook says.
While Baker is now working elsewhere, Eureka’s 2020 PY adviser, Tim Manwaring, went on to become a Certified Financial Planner and is still with the firm.
This year’s recruits, Liam Roche and Julian Chan, are working under Brisbane partner Sally Bell and Cook, respectively.
Whilst there is more effort in taking someone through a professional year, the potential for recruitment and staff retention outweighed the costs, Cook says.
“We’ve got a great staff retention ratio and we want to be an employer of choice,’’ he says.
“If you’re a growing business you’re growing the organisation via merger and acquisition, and you are going to need more planners.
“You can either find someone, train them or poach from a competitor.”
Eureka examines its employment-to-cost ratio every quarter and aims to keep total employment costs including wages, bonuses and super below 50 per cent of company revenue.
Cook says planner remuneration, should be no more than 25 per cent of the revenue they look after, meaning an adviser on a $200,000 annual salary would handle $800,000 in revenue from about 80 to 100 clients paying an average of $8000 a year.
Starting remuneration for a Sydney-based professional year adviser was between $80,000 and $90,000 and finishes at $100,000, he says.
These costs are a reason why Adelaide-based firm Johnston Grocke is yet to host a new adviser.
“The difficulty is the industry still hasn’t got its head around how to train and cover the cost,’’ director John Grocke says.
Larger advice firms with around 100 employees would be able to absorb the costs 0f hosting one or two new advisers each year, but for smaller firms the invested capital may be a lost cause, he says.
The established networks and life experience were also desirable elements for financial advisers dealing with high-net-worth clients, he says.
Meanwhile BFG Financial adviser Michael Baldry says his Northern Sydney-based employer will use the professional year to upskill support staff to become advisers.
Baldry himself worked in the firm’s client services and back-office support when he began his professional year in October 2020.
In the lead up he began a post-graduate qualification in financial planning and sat the financial adviser exam in March 2021.
With minimal change to his duties in the first six months as a support staff member, he began shadowing a lead adviser to learn the ropes and completed structured learning and discussions with his supervisor to help him grow professionally, he says.
“In Q3 and Q4, [after] passing the financial adviser exam, I began attending new client meetings with my supervisor, prepared SoAs and conducted some meetings on my own with existing clients,” he says.
Since October 2021, Baldry has been a licensed financial adviser working with new and existing BFG clients.
“At present, I’m still the only PY that we have commenced [but] we have made it known to our up-and-coming team members that we are open to supporting them through a PY in the future if they would like to progress,’’ he says.
“Whilst I’m sure there are benefits to undertaking a PY with a larger licensee, BFG were uniquely positioned as a smaller practice to take a very personalised approach to my development.’’
Baldry says another challenge for his firm was to alter many of its processes to allow him to meet PY requirements such as attending meetings, preparing steps of the advice process.
“I’m pleased to say that many of the internal procedures we altered to accommodate the PY have been left in place and continue to benefit the practice,” he says.
