Before FASEA’s launch in January 2019, there were more than 28,800 advisers on ASIC’s register – two years later, that number has declined to around 21,000. And with just 58 provisional advisers on the register in January, it’s clear the flood of adviser departures is becoming a threat to the industry’s long-term survivability.
As we discussed late last year, ASIC appears to be aware of this issue, which is why it’s launched its affordable advice project. Commissioner Danielle Press said at the time that it was crucial to increase affordability measures because it “may help consumers make better financial decisions, especially during times of heightened vulnerability.”
There were a number of proposals on the table – consultation has since closed – but one key measure was increasing clarification around the provision of limited advice. ASIC noted that its ongoing discussions with advisers “revealed that many financial advisers and advice licensees remain uncertain about how they can provide compliant limited advice.”
In a recent submission to the 2021-22 Budget, along with recommendations regarding tax deductibility and ASIC funding levies, the Association of Financial Advisers proposed a different idea: a wage subsidy for practices employing Professional Year students.
The submission explained: “At present there are only 58 Provisional Financial Advisers registered on the FAR. This is the number of new financial advisers in the second half of their Professional Year, who have passed the FASEA exam.
“In an environment where 7,600 financial advisers have left the financial advice profession since December 2018, more needs to be done to ensure that they are being replaced by new advisers and to encourage more employment and growth in small business and more jobs for students.”
The AFA noted 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.
Based on the results for last week’s NMPE survey, the separation of simple and complex advice, along with the abolishing of SOAs and ROAs for specific types of advice, are key measures for increasing advice affordability. Are there any more you think should be discussed?
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