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Financial Advice Association Australia to draw on students as adviser numbers decline

The Financial Advice Association Australia will launch an advertising campaign to get younger Australians to pursue a pathway in the sector.

The FAAA says this is in response to the number of new entrants to the industry virtually grinding to a halt at the same time adviser numbers have halved in five years.

It comes as the peak body says that the average price of advice has increased 25 per cent to $4000 in the past year as growing regulatory expenses make it all but impossible to offer cut-price financial advice.

Australian Securities and Investments Commission data shows that there are 15,600 registered financial advisers, which is almost half the number of advisers who were working in 2019. FAAA chief executive Sarah Abood said while numbers have stabilised in the past year, it was worrying that only 317 new entrants joined the financial advice profession in that time.

“We’ve got a big problem with new entrants. New entrants have crashed and the 312 advisers who first provided advice in 2023 is not enough to offset those retiring,” she said.

The FAAA in the new financial year will launch an advertising campaign which will promote financial planning and why it is an attractive career pathway. It will targeted at students and those looking to change their careers.

“We want to really get more people considering this career, get more students coming through these degrees, get in front of that pipeline again,” Ms Abood said.

“We haven’t been in the market talking about why you should consider financial planning as a career. We’ve often relied on the children and existing planners, clients and so on.”

The FAAA is raising awareness among professional groups, high school students and graduates to support entry routes into the profession while maintaining education standards. It will also launch an advice academy to promote more professionals to work as financial advisers.

The body said that the onus had fallen on smaller Australian Financial Services Licence firms (AFSLs) to recruit and train advisers compared with several years ago when big employers used to run large graduate programs.

The pipeline of work is expected to increase in the coming years. As many as 750,000 Australians plan to retire in the next five years and a further three million are eligible to start drawing upon their superannuation in the coming decade. An estimated $5 trillion is expected to transfer from baby boomers to younger generations by 2034.

The average cost of financial advice was $4000 thanks to higher regulatory costs, including registration fees and requirements to fund the new Compensation Scheme of Last Resort (CSLR) levy.

Ms Abood said the average Australia expected that advice would cost only $540, but that regulatory expenses meant that was impossible.

“The government wants to make high quality financial advice more affordable and accessible for more consumers and yet so much of what’s happened, particularly in the last financial year, has sent it the other way,” she said.

“We need a H&R Block for financial advice. That kind of cheap and cheerful brand that does a good, simple job for consumers, and we need legislation to help us get there.”

Taken from The Australian Business Reviews News Article on June 26, 2024.

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