Adviser job vacancies a misleading measure: FAAA

Relying on job vacancy data will generate a misleading impression of the financial advice profession, according to the Financial Advice Association of Australia (FAAA).

The FAAA has urged changes to the way the profession is assessed arguing that the current Skills Priority List (SPL) used by Jobs and Skills Australia within the Department of Employment and Workplace Relations is based on an inappropriate approach.

In doing so, the FAAA as acknowledged the Government’s inclusion of the shortage of financial advisers/planes on the SPL but said the ‘shortage metric’ used in the SPL appeared to be a measure of job vacancies based on employers going into the marketplace, rather than client demand.

“However, our investigations have found that there is significant difficulty in finding job vacancy data for adviser/planner positions, that is reliable for determining skill shortage. We do not believe available job vacancy data accurately reflects the skills demand for financial advisers/planners,” the FAAA said.

“This is due in part due to:

• the current size of the market (compared to other occupations such as engineering, accounting, or medicine).
• the strong reliance on ‘professional networks’ to identify and attract potential financial advisers/planners to a company
• the use of profession-driven job boards and forums
• business and adviser relationships with universities that have resulted from the legislated education and training requirements influencing the skills pipeline. These relationships are leveraged to access potential candidates to fill financial adviser/planner roles (both existing advisers and new entrants) before being advertised.

As stated above, we believe the skills shortage corresponds with the JSA classification of a ‘Long training gap’, not a ‘suitability gap’.

Discussing the reasons for the decline in financial adviser numbers, the FAAA said the reasons were predominantly:

ons for the decline are predominately:

• the exit of the banks from the advice market as a result of the Royal Commission.
• the implementation of new legislated minimum education and training requirements, and an exam, to be able to be registered and legally permitted to work as a financial adviser/planner in Australia, and
• an ageing financial adviser/planner workforce.

“Many experienced advisers held the only relevant qualifications available at the time of entry into the profession. The transition arrangements for the new education requirements lacked recognition of these qualifications and past experience, resulting in some long-standing advisers deciding to leave the profession rather than undertake lengthy and expensive university courses so close to retirement,” it said.

“The pipeline for ‘new entrants’ to fill this skills shortage is very slow, due to the:

• time required to complete the mandatory financial planning degree – eg. the minimum AQF7 level degree requires either a Bachelor’s Degree or Graduate Diploma
• inflexible nature and structure of the legislated approved degree requirement, and
• professional year requirements.

“New entrants into the profession have slowed dramatically from 1,677 in 2018 to an average of 178 per year since the introduction of the education standards in 2019. This has created a skills shortage that corresponds with the Jobs and Skills Australia classification of a ‘Long training gap’.”