As we discussed recently, those advisers who haven't passed the FASEA exam by the end of 2021 will be ineligible to practice in the new year.
The introduction of the FASEA regime has correlated with a significant-enough proportion of advisers leaving the industry - over 8,000 since January 2019 - that even ASIC now considers it a causative factor, as referenced late last year in its affordable advice consultation. While the future of the framework around professional standards seems even more uncertain following news that FASEA is to be wound up, what's clear is that advisers are leaving and there aren't enough new entrants to close the gap.
To determine whether or not this sentiment has shifted over the past few months, NMP Education conducted a survey of its community which found that around 66% of advisers intend to stay in the industry past the FASEA deadline, although a third of this group have yet to complete the adviser exam.
The remaining third of participants in the survey, though, are almost evenly split between those who are undecided whether they'll continue in the industry and those who have decided they won't.
If we take our community survey as representative of the general adviser population in Australia, that could mean at least 3,500 more advisers leaving by the end of the year. And with just 58 provisional advisers on ASIC's register in January, there seems to be very little indication that the industry will be able to recover from these losses in the short term.
As discussed in a separate piece today, the pressures on the advice industry aren't just coming from FASEA requirements: businesses attempting to budget for their levies under the ASIC industry funding model based on initial estimates were shocked to see a 160% increase in amounts owed. Given that there's an additional fee per authorised adviser under a licence, one wonders how much of an incentive there is to bring on new entrants in the first place.
This is one of the reasons the AFA recently argued in a submission that there should be a wage subsidy for advise practices employing Professional Year students. The submission explained that the majority of advice practices are small businesses currently under "tremendous financial strain," but with the right incentive they could both grow and "provide valuable employment opportunities" to students.
The submission argued that a $10,000 subsidy would make a "material difference" in this regard.
Of course, even with such a subsidy in place, it's unclear to what extent it will make up for the losses of so many seasoned advice professionals from the industry. Where to next?
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