3 ways AFSLs can improve their PY process

As the number of new entrants to the industry passes 100 for FY25, ASIC has reported that firms are finding it a positive experience and highlighted three areas to improve the process.

Last week, Money Management wrote how the number of new entrants on the Financial Advisers Register (FAR) now stands at 112 since the start of the 2024–25 financial year, according to Wealth Data. 

The research house also found that 376 advisers entered the profession for the first time in the 2023–24 financial year, meaning that FY25 is off to a strong start in proportion.

The Professional Year (PY) program was established in 2019 and with implementation underway, ASIC decided to conduct a progress check with its Australian financial services licensees (AFSLs).

This was conducted in the form of a cross-section of AFSLs to understand how they had found the process of taking on a provisional relevant provider. 

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These are those provisional advisers who are undergoing their PY of 1,500 hours of work and activity, and 100 hours of structured training on their way to become a full financial adviser.

Surveyed AFSLs were asked about: 

• The process for taking on the responsibility of training and supervising a provisional relevant provider.
• The processes they used to verify and record training hours.
• How they selected and monitored the supervisor of the provisional relevant provider.
• If the process for certifying the provisional relevant provider met all of the requirements for completion.

Assessing the findings, ASIC said: “All licensees involved reported a positive experience of supporting a provisional relevant provider through their professional year. 

“Some listed the benefits as supporting and assisting with their succession planning, and appreciated that they could mentor and train a provisional relevant provider from within the business rather than hiring an external adviser.”

When it came to areas for improvement, ASIC reminded AFSLs that it was paramount that they keep records of the work and training conducted during the PY.

“Most licensees indicated they were able to comply with the recordkeeping obligations by using, and in some cases amending, the templates created by the former standards body, the Financial Adviser Standards and Ethics Authority. 

“Others created their own methods for maintaining logbooks to record the structured and unstructured training hours, and to demonstrate and record that all key competencies were satisfactorily acquired.”

The three other recommendations were:

• Putting policies in place about who is qualified and suitable to be a supervisor.
• Developing processes for how licensees will monitor professional relevant providers and the supervisor, including their advice, once the provisional relevant provider is in the third and fourth quarters of their professional year.
• Having detailed processes in place for final sign off of the completion certificate.

ASIC also reminded AFSLs that an adviser’s record on the FAR needed to be updated once an adviser transitions from being a provisional relevant provider to a relevant provider, and that they had met the required qualification standard.

Advisers have discussed how they are investing in their PY and graduate programs to organically grow their adviser numbers and future-proof their practice, such as Esencia Wealth and Apt Wealth. 

Moreover, Anne Palmer, general manager of education and professionalism at the Financial Advice Association Australia (FAAA), previously argued that the onus has been falling on smaller AFSLs to recruit new advisers and that larger licensees’ intake programs are not operating on the scale they used to be at.

An AMP spokesperson told Money Management that its PY program has supported 29 candidates on average each year since its introduction in 2019, and currently has 59 active candidates completing its PY program. Meanwhile, Count said it has supported 38 candidates currently going through or having completed its PY program.