It's no secret Australia's financial planning industry is suffering a worker shortage. Many words have been spent on the topic, with industry heads to sole practitioners weighing into the debate. Yet, while all and sundry have attempted to cope with the lack of advisers, paraplanners and support staff, secondary problems have arisen that far outweigh the first. Put simply, the industry is turning on its own. Current advice givers are being criticised about their quality. And if that isn't enough, it appears the value-of-advice mantle once proudly held by advisers has given way to a focus on the dollar over quality service. Despite the shift in what is considered quality advice, consumer demand for financial advice remains high, thus delivering a double-edged sword to industry recruiters.
"There are substantially more positions this year. We have had to bring on new consultants to meet the demand," Financial Recruitment Group managing director Judith Beck says. "There are dozens of positions going at any one time for both financial planners and paraplanners. For example, a search of paraplanner roles on seek.com.au resulted in 266 ads and a search for planners resulted in 1352 ads nationally, with most in Melbourne and Sydney." Bruce Henderson, director of fellow recruitment specialist Robert Walters, has also experienced firsthand the increase in candidate demand. "We have specialist financial service teams around the country and the demand for quality candidates has been growing steadily for the past two to three years across all our clients' markets - banking, wealth, funds and insurance," Henderson says.
"Many employers are looking for much the same in terms of core skills and experience. However, these are very client-focused sectors, so there is a real appetite for technically-qualified candidates who ideally also possess developed communications and interpersonal skills." For Profusion Group head of financial planning Chris Vine, as well as noting an adviser shortage, he says there has also been a real decrease in availability of paraplanners. "We're finding them incredibly difficult to find," Vine says. "Where advisers are in a very good market they are spending their time in the market seeing clients and business developing, and so they rely more heavily on qualified paraplanners. "So that in a growth market, coupled with a candidate-short market, means that paraplanners are definitely in demand."
One group tackling the paraplanner shortage is Coin Financial Planning Software. In July, the Macquarie-owned group took a 50 per cent stake in paraplanning outsourcing group Outplan Outsourced Solutions. According to Coin managing director Tony Graham, the group decided to outsource its paraplanning after a number of clients and advisers requested stronger support services. "We thought that it would be a value add for our clients to be able to provide that. And then on a Macquarie adviser services model, it was very consistent with the strategy of providing a suite of offerings for advisers," Graham says. "So we've got everything from CMT to wraps to Coin, to paraplanning, because that's our focus." A number of other dealer groups and financial services institutions are also taking the recruitment process into their own hands. AMP Financial Planning (AMPFP) managing director Michael Guggenheimer says many of its practices, each a small business in itself, run retention programs, including short-term bonus schemes and long-term equity acquiring opportunities. "Having a focused strategy on planner recruitment has allowed us to tap into opportunities that are providing us with some promising outcomes," Guggenheimer says. "AMPFP's planner retention is good but of course we always strive to improve on it." Count Financial runs similar retention plans, with its chief financial officer, Michael Spurr, stating every full-time staff member at Count receives an allocation of company options each year, which vest proportionally over a three-year period. "This is a key part of our remuneration strategy, that is, to allow our team to share in the growth of our business but to also encourage them to think like business owners," Spurr says.
However, he says it is inevitable, especially in this market environment, that a company is going to lose staff on occasion. "We have a particularly young staff so sometimes they just want to see what else is out there. What's important is that we keep the people we want to keep, which we think we do most of the time," he says. "We think we have built a good working environment with great career opportunities, not just at head office but across our network. A number of head office team members are now working as financial planners for our adviser firms." He says Count also has an undergraduate program, Future Leaders, which takes in about six undergraduates each year.
MLC is another group that offers its own recruitment plan. Last month, MLC announced its next intake of students into its Adviser Scholarship Program. The group's latest intake totalled 63 nationwide. Since 2005, 80 students have been through the program. As well as internal recruitment options, a number of dealer groups are considering establishing specific financial planning academies. "AMPFP is developing a number of initiatives aimed at sourcing, attracting and developing people who would like to work in the financial planning industry," Guggenheimer says. "These initiatives include scaling up our paraplanning business and establishing a financial planner academy. We envisage that a number of AMP employees will transition into these programs." Securitor, the St George-owned dealer group, also plans to set up an academy for trainee planners. The first intake of students is slated for October next year.
St George is also planning to target teachers with the lure of good salaries in its drive to find more financial planners. The group plans to work on establishing a TAFE-style apprenticeship within its Asgard Wealth Solutions, Advance and Securitor dealer groups. The banking institution will also roll out a new employee incentive program that allows an employee on, for example, $50,000 a year to earn $40,000 for four years and take the fifth year off on the same salary. St George's offer of a year of paid leave may seem extraordinary, though as a result of staff shortages and high demand, candidates are in a position to name their price. In fact, the 2007 Hays Banking Salary Survey found the strong demand for skills is forcing employers to pay a premium for quality staff, particularly in the country's north and western states. Salaries for a senior paraplanner in Brisbane rose from $65,000 to $80,000, while practice development managers in the same area increased from $90,000 to $110,000. In Western Australia, salaries jumped from $85,000 to $115,000 for a financial planner and $65,000 to $80,000 for a senior paraplanner. "There is a discrepancy with some roles as to what they are asking for and the package they are offering. Financial planner and sales roles are well paid, and companies are not asking too much," Beck says. "However, there are several roles that haven't moved with the times in terms of remuneration, where companies are expecting a candidate at a certain level for a salary that isn't realistic. We are finding this with the more technical and compliance-type roles." Vine says candidates are now very aware of their value.
"Employers are very aware as well. So what we're finding is that counter offering is pretty invaluable," Vine says. "We've probably had to adapt our processes. It isn't really a challenge because we're very much aware of it and we really acknowledge the counter-offer process with the candidate right from the start and making them aware that it [counter offer] will happen." Henderson says while the increase in salaries is not new, the position of power candidates now find themselves in is an interesting change. "Like so many other sectors there is a genuine shortage of candidates across the financial sector," he says. "Adding to the issues of a tight candidate market is not only the ever-increasing requirement of technical accreditation, but for industry compliance standards the bar has been lifted in terms of the calibre of people entering the industry. "This obviously has a limiting effect and that is why we actively engage with industry bodies and associations to enable better training and standards to be met."
One person keen for the standards of the industry to be met is Association of Financial Advisers (AFA) New South Wales director Jim Taggart. "When people say to me I'm a financial planner, I get a bit worried. One of the concerns and criticisms that I have is that you can do PS146 and you can do the ADFS and call yourself a financial planner," Taggart says. "There's definitely a shortage of planners and paraplanners in both the institutional and dealership levels. In particular, there's a very big shortage and it's a criticism of experienced financial planners and paraplanners and within that there are also problems in recruitment of just what constitutes a financial planner and a paraplanner. "I have concerns and I think our industry is challenged by a lack of any rigor associated with what constitutes a financial planner." He says as knowledge has exploded among consumers, particularly baby boomers, there is an increased awareness of the need to get sound financial advice, though at the moment, the industry is in a position where it has not kept up. FPA chief executive Jo-Anne Bloch agrees there is an issue in terms of quality of advice, though pinpoints the issue as being a lack of education. "I think paraplanners are the most acute in terms of a skills shortage. But I think what you'll find is that it's more the people that are more than PS146 compliant," Bloch says. "I think what we're looking for are people who are PS146 compliant, preferably have DFS with a little bit of experience and at the moment I think what's happening is that people are just moving around getting a better salary."
She says the challenge for the industry is to increase the funnel of people coming into the area and trying to attract graduates and career changers to want to become financial planners and get their qualifications as soon as they can. "I think there are a couple of challenges in attracting and recruiting people to the industry. The first one is that we compete very heavily with accountants and lawyers and investment banks and there's a lot of media about how much money they spend on universities and graduate recruitment," she says. "Now I think some of our members, particularly the larger licensees, do that already but I don't think as an industry or as a financial planning profession we necessarily do that. "So the question then has to be for our members is that something the FPA should be doing or should we be leaving that up to our licensees. I think the overwhelming message that we're getting from our members is that the FPA should be helping."
Late last month the FPA and the AFA both announced they were in the planning processes for new programs and internships to combat the industry's increasing adviser shortage. The FPA is working with the Education and Training Department in New South Wales to help develop an internship program. The program, which is in the concept stage, would target university graduates and TAFE students by offering them work experience with dealer groups in the hope it leads to full-time employment. The FPA would like to have a formalised plan in place by the end of the year. The AFA is in the planning stages of a new post-nominal course. The course is being developed for existing practitioners and depending on its success may lead into undergraduate and postgraduate programs. The AFA will be going to tender with educational institutions and plans to roll out the program in the next 12 months.
