How do people enter the advice profession down under?

“Deregulation won’t unlock better advice on its own — not while conflicts remain embedded in the system. Trust isn’t built through disclosure, it’s built through alignment.”

It can be difficult for young advisers to get experience in Australia, but the education pathways available to them are more advanced than in the UK, says Simon Talbot.

The senior adviser and partner at Koda Capital notes that training is one of the main differences between UK and Australian entries into the advice market.

A key feature in the Australian system is that advisers can become qualified through university study, whereas a lot of UK universities do not offer a financial planning qualification.

In the UK people do not need a university degree to become an adviser.

According to the Financial Advice Association Australia, anyone wanting to become an adviser must complete an approved degree at either bachelor level or postgraduate level.

Australian advisers need to pass the financial adviser exam, complete a professional year with a licenced advice business, abide by the financial adviser code of ethics and complete annual CPD — all of this is similar to the UK.

But it can be hard for young advisers to complete this professional year and get the experience they need, Talbot explains.

“It’s all about doing well as businesses,” he says, “and so unless you can come in with a bunch of clients [it can be difficult]. It’s kind of a chicken and the egg. How do you get that experience?”

Talbot says his firm promotes working as a team so they can “furnish younger advisers through the system”.

They can start by learning how to be paraplanners, learn about the review process and start to help. Then as they develop, they can become advisers, he explains.

“That’s probably the best way to achieve progression.”

Regulation and dwindling numbers

The UK market has undergone significant regulatory change in the past 15 years, and so has Australia. In both jurisdictions this led to an exodus of banks from advice, and adviser numbers started to dwindle.

While the UK saw the implementation of the Retail Distribution Review in December 2012, in Australia in 2019 there was the Royal Commission report into misconduct in the banking, superannuation and financial services industry, which found malpractice and conflicts of interest and also led to reforms of financial advice.

The UK’s RDR reforms included banning product commission payments to advisers, introducing clear adviser fees, requiring higher (Level 4) qualifications, and mandating disclosures for “independent” or “restricted” advice.

The Royal Commission report included changes to commission, ongoing fees and the disciplinary system.