(Financial Review) - The Stockbrokers and Investment Advisers Association says the pipeline of new entrants to its profession has “collapsed”, and is urging the government to exempt its members from mandatory financial planning studies.
The industry body’s chief executive, Judith Fox, a member of the Australian Securities Exchange’s governance council, said that it was a “matter of urgency” that stockbrokers be allowed to continue practicing without being subject to the professional standards edicts introduced by the previous Coalition government.
Under 2017 legislation, all individuals licensed to provide financial advice (which includes stockbrokers) must have sat and passed a national exam by January this year and must obtain a relevant tertiary degree by 2026.
But Ms Fox said the list of relevant qualifications – set by the Financial Adviser Standards and Ethics Authority, a now-defunct government agency – was “too narrow” and biased towards broader financial planning services and not equity markets expertise.
“The new entrant current pipeline to our profession has collapsed,” Ms Fox told the association’s annual conference in Sydney on Tuesday.
“It is extraordinarily difficult to get new entrants in, because those interested in a career come with great degrees in commerce, finance economics, from our top-tier universities, and then they find they have to complete unrelated further study in financial planning. It turns many away.
“We urgently need that qualification pathway to be broadened so that we can attract the brightest and the best to our profession.”
She said the effort to broaden the range of relevant degrees faced “opposition from financial planning academics”. Some critics believe qualifications in financial planning – which assesses broader tax and financial strategies beyond stocks and investments – are necessary to truly provide advice that is in the client’s best interests.
Plummeting numbers
The number of registered financial advisers has plummeted by 40 per cent since the damning Hayne royal commission, although analysts say the decline has begun to plateau. However, Ms Fox warned government that “another exodus” of advisers was on the cards unless it amended the education requirements.
The Albanese government held a consultation on the financial adviser education rules last year, but is expected to kick off another round in coming months. “[This] is going to be the third consultation on expanding the new entrance qualification pathway,” Ms Fox lamented. “So, there’s much more work to be done on this front.”
Assistant Treasurer Stephen Jones told the conference he had heard the complaints of stockbrokers, but made no commitment to broaden the range of approved degrees. “If I look at the stockbroking profession, you’ve been a profession for centuries,” the minister said in a pre-recorded video. “Many of your members have degrees that, to date, have not been recognised as qualifications.”
He said many stockbrokers would benefit from the government’s commitment to exempt advisers with at least 10 years’ experience and a clean regulatory record from obtaining a degree – a Labor election promise first reported by The Australian Financial Review.
Mr Jones said the government legislation making good on the commitment was imminent.
The association’s plea comes as the sector faces heightened commercial pressure from market volatility and a raft of venture capital-backed DIY online and discount brokers. The Financial Review earlier this month reported Sydney boutique firm CCZ Equities was shutting after 24 years thanks to dwindling trading volumes.
