Industry Feature – Growing The Talent Pool From Universities

To survive long-term and to service the growing demand from consumers, the advice industry needs to stop this ongoing talent drain and build increased capacity. With the current ratio of leavers to joiners typically 100:1, the disparity is stark and should be raising alarm bells with government and regulators. Certainly, the industry itself needs no reminder.

The capacity building may come from: changing regulation including relaxing rules for accountants and other specialists; encouraging job changers from other industries; drawing from the talented pool of paraplanners and associates working behind the scenes; and growing the supply of talent from tertiary institutions. This special feature looks at what is happening with financial planning students at universities and the challenges confronting them as they on-board to a financial planning career.

The Student Pipeline
We understand from industry reports that there are approximately 900 students enrolled in tertiary financial planning courses nationally. These include students at all stages of a traditional three-year undergraduate degree. Adviser Ratings conducted a survey in early August of academics from 24 universities offering financial planning courses. The following results are from the first nine respondents representing institutions in every state except Western Australia. Importantly, they do not include responses from two institutions that dominate student numbers, namely Deakin and Griffiths. This survey also excludes Kaplan that focuses almost exclusively on existing advisers. From our first Chart, it is firstly encouraging to see substantial increases of up to 50% in the number of students anticipated to enrol, graduate and then enter the financial planning industry, although admittedly these are off a low base given the respondents’ relatively small market share. However, from our second chart, what is disconcerting is the high drop-off rate of students actually making it into their chosen profession, with only 28% of enrolled students eventually working for a financial planning firm. Of further concern is the 44% drop-out rate of students not completing the degree

Table 1 lists the key deterrents for students as perceived by their academic leaders, with the greatest concern being the introduction by FASEA of the professional year.
The second greatest concern, being negative perception by the public, is likely reflective of the terrible press the industry has received, particularly from the Royal Commission. While the FASEA changes around onboarding new advisers are cast in stone, arguably the industry itself has not done itself any favours in promoting the benefits of advice to the general public in order to change perceptions. Nor has the industry done a great job marketing into the universities to promote interest and win more students across from other courses. As an example, there are approximately 100,000 accounting students enrolled nationally that represent a huge pool of talent that should be targeted for conversion.

One business making a difference is Striver, previously known as Grad Mentor, that has placed hundreds of students in the financial planning and accounting professions since 2013. The Striver platform takes students through a comprehensive screening process of tests and interviews to not only help in the skills matching with potential employers, but increasingly to help with selection requirements around the softer elements of culture and ethical behaviour. It expects to place 120 students into financial planning firms over the next 12 months, although primarily into administration, client services and paraplanning roles. Striver acknowledges that the transition for graduates into financial planning is not a linear process and that it can take a few years after graduation to become sufficiently experienced to work as a financial planner.

Onboarding Graduates
The professional year requires participants to complete 1,600 hours of work and training (the equivalent of one year), including 100 hours of structured education and training and 1,500 hours of work and supervised experience. Completion of the many “specified activities” and “key competencies”, including technical competence, client care and practice, regulatory compliance and consumer protection, all need to be documented by the individual and validated by their nominated supervisor and by the licensee.

However, there appears to a disparity of views amongst advice firms about exactly what is required, perpetuated by inconsistent guidance from FASEA and different approaches taken by licensees according to how they view their role and the risk attached to their responsibility for the new entrant.

Maybe it is to be expected that the first tranche of new advisers entering the industry would come up against some teething problems. With relatively few advisers taking part in this process (there are only 16 advisers listed as “provisional” at the moment) these participants form the vanguard that will potentially smooth the progression of the transition into advice for those that follow. We would expect the method and administration of the process will become somewhat smoother over time

Was this helpful content?Let others know - share and vote-up