Stress is increasing, mental health is decreasing: Addressing the wellbeing of financial advisers

Warning: the following story contains details that may be upsetting or distressful to some readers. Reader discretion is advised.

The last few years has been some of the most eventful, controversial and overwhelming for Australian financial advisers and things don’t appear to be slowing down anytime soon with the looming Quality of Advice Review (QAR) in December.

Adding to this, the perceived “mass exodus” of planners in 2026 — due to the current requirement for existing advisers with no degree to have an approved qualification by 1 January 2026 — has resulted in concerning statistics for the mental and emotional wellbeing of Australian advisers.

In May, ifa exclusively revealed the results of a nationwide survey — launched by Artemis Investments (NSW) director Philippa Hunt and Forte Asset Management founder and director Steve Prendeville — which surveyed nearly 800 advisers around the country and sought to provide a screengrab of the situation that planners face in 2022. A staggering 80 per cent of respondents experienced a significant increase in their stress levels since the Royal Commission and subsequent government legislation.

More than half — 54 per cent — said their mental health had “significantly declined”, with the highest rates coming from those who own their own business.

However, a change of government has provided some optimism in the sector, particularly due to new financial services minister Stephen Jones pledging to fix the “hot mess” left behind by the Morrison government. In the weeks leading up to the election, Mr Jones put forward that an Albanese government would not require advisers with 10 years of experience and an “unblemished record” to complete a university degree to practice, and that it would look closely at recognition of prior learning.

Speaking to ifa in the months following the release of the findings, Ms Hunt said that while the support of advisers’ mental health is important and appropriate, it is merely “fixing the symptoms” and the most impactful way to address their wellbeing is by directly addressing the “rushed” and “wide-reaching” legislative changes in recent years.

“Data showed trust is lost both of government and the regulators every time a new piece of legislation and guidelines are imposed that increases overregulation of existing compliance procedures and increases stress of additional costs that are then passed onto clients,” Ms Hunt explained.

“There is a level of resentment and anger from advisers, clients and the industry which likely contributed to the change of government. From discussions with advisers and their mental health since the survey was published and election over, there is now a feeling of relief that there is a new government that may help.”

While it is yet to be seen if Mr Jones and the Albanese government will make good on its promise to enact positive change in the industry and the QAR still months away from release, what can financial advisers do now to take care of their mental and emotional wellbeing, and deal with potential anxiety or stress?

Dealing with mental and emotional stress

Dr John Molineux of Deakin Business School in Victoria was involved in a separate study looking at advisers’ wellbeing in 2021 and the results were no more encouraging. Their survey found that 73 per cent of advisers experienced high levels of burnout from stress and 67 per cent had dealt with some level of depression.

The study also reported that, compared to the average Australian, 51 per cent of advisers were more likely to be a part of a high mental health risk group.

Dr Molineux has suggested that planners should consider undertaking more professional development such as developing capabilities in psychological flexibility and recovery techniques like physical exercise, as well as “psychological capital” which deals in building confidence, resilience, hope and optimism. As well as this, Dr Molineux has pushed for clear boundaries around an adviser’s work life not interfering with home life.

“Finding a mentor and/or buddy who works in the financial advice sector is another good strategy for working through issues and finding pathways to go forward,” he said.

“Joining a network of financial advisers is also a good strategy. We suggest that financial advisers seek people in the sector who have overcome the difficulties of the imposed change and have moved forward, so that financial advisers who are struggling can learn from their approaches.”

In his research, Dr Molineux noted that only a minority of advisers were actively improving their mental health.

“However, we noticed that the successful advisers had accepted what was going on in the industry, and although they didn’t like it, had decided to push ahead and face the challenges,” he explained. A lot of this was around their mental approach to work and life, plus building their personal capabilities by seeking professional development. Many of these people were also seeing that the financial adviser crisis was an opportunity to reshape or expand their business, or to sell-up, or go into a partnership with others.”

In May’s survey, Ms Hunt reported that many are now accessing GP medical help, while others have committed to working with psychologists and are using medication for anxiety and depression.

“Some have tried to manage it through self medication of drugs and alcohol, and some younger advisers are taking up smoking. A small number attempted self-harm. Others are doing high-risk behaviours as a distraction from their stress. There is a high number percentage of fights, arguments, withdrawal, relationship breakdowns, separation and divorce.

“Educating advisers to realise that mental health is the same as any other illness that needs treatment is crucial to accessing appropriate treatment. Referral to psychologists, and counsellors doing trauma work is necessary so that the stress is not downloaded into the home environment and causing family distress. Diet and exercise programs, and bodywork such as physiotherapy, chiropractic and social timeout is helpful.”

Ms Hunt added that age has also played an important factor in the findings.

“Advisers are conscious of mental health. However, not all are recognising the depth of stress until it is too late. Men — and it is mostly 80 per cent male in this industry and that ratio answered the survey — don’t always admit that they are struggling. Men of the current generation born in the 1950s, ’60s and ’70s were not socialised to express emotion and grief. It was not considered appropriate to let down their guard. One verbatim comment said that he would not seek help as it would be admitting weakness. They considered that they don’t need help and will battle it out on their own.

“However, 78 per cent said that they are taking some personal steps to assist mental and emotional health with exercise, diet, yoga, trips away and bodywork like chiropractic. They are not always accessing medical or psychology counselling services.”

Exams

As noted in the May survey, many advisers regarded the financial adviser exam as “flawed” and difficult for many to pass on their first attempt.

Among those surveyed, 62 per cent agreed that the exam should be examining specific areas of advice and only cover a specialty area, while 78 per cent agreed that specific feedback on each question should be provided if an adviser does not pass.

“The exam conditions were not well regarded for a 3.5-hour computer exam for attendees who had not either done this style of exam or not done similar format for many years. Knowing that livelihood depended on an exam passed caused great stress for older advisers,” the report reads.

“Exam questions were not relevant for other occupations such as stockbroking and specialist risk advisers. The questions were ambiguous, were using grammar that created issues for those who have English as a Second Language. The exam needs to be restructured to allow better application to sit for the exam.”

In their recommendations, Ms Hunt and Mr Prendeville suggested that the exam format be restructured to allow older advisers who have not experienced a master’s level style, 3.5-hour exam to sit the exam in a format more suitable to them.

Dr Molineux said this is an area that must be addressed urgently.

“Clearly, the ethics exam is not working for everyone, particularly specialists such as risk advisers. The exam should be reshaped to more accurately reflect the different roles in the industry. We would suggest separate exams for different specialisations.

“Regulators could reduce the compliance burden by working with industry associations to create more efficient and less burdensome compliance processes. Also, regulators and large organisations in the industry could provide free access to development opportunities to improve the capabilities of FAs across the country, plus provide counselling services for those in need of help.”

Stephen Jones

Mr Jones’ role in improving the mental and emotional wellbeing of financial advisers is vital, not only because of his recent promises to address the contentious issues concerning the sector, but because he himself has criticised the former government’s performance when dealing with the financial services industry.

Earlier this year, on an exclusive Momentum Media podcast, Mr Jones criticised the government for “monumentally mishandling” regulatory changes across the financial services industry and pointed to the “tsunami of regulatory changes” as the main culprit for adviser exodus in Australia.

Particularly when discussing the current education requirements, he said that more experienced advisers who have been providing advice for decades are needed in the industry and should be seen as “mentors” and “trainers”.

“Let’s take a step back and say, ‘let’s do some recognition of their prior learning and experience, not a Mickey mouse job’. So we’ll do it properly,” Mr Jones said on the podcast.

“There’s been some concern in the sector for everyone who’s done the degree that, ‘That was a waste of time for me when somebody else is going to get a free ride?’ “We’re not saying it’s a proper recognition of your professional experience and qualifications so that you can jump through the right hook for you in a way that is good for you, but safe for the people you’re advising.

“That’s the way we want to go. I think it just makes militant good sense to be honest.”

Ms Hunt said that feedback from advisers she has dealt with said they are buoyed by Mr Jones’ comments.

“This has given a ray of hope that legislation that increased paperwork, compliance and regulation and time costs that did not achieve any better outcomes for advice will be ameliorated and made workable,” she said.

“With the new government, addressing the source of the problem will certainly help manage both advisers’ stress levels, mental health and staff health and productivity. The greatest issue was the disempowerment of advisers over their life. A loss of power and agency over their business decisions, how to generate enough income to cover rising costs, and increasing paperwork creates the most distress.”

Ms Hunt revealed that Mr Jones appeared at the Association of Independently Owned Financial Professionals (AIOFP) conference in Darwin in June where he again reiterated his early pathway plans for the sector. He also acknowledged the mental health issues facing the industry and said that the data shown in Ms Hunt and Mr Prendeville’s May survey proved this must be taken into account.

“He said that Treasury has been instructed to find ways to achieve the aims. He fielded questions about getting the worst of the legislation amended and said that this has to be looked at and how to achieve it,” she said.

“It appeared to us that he has a positive approach to fixing the issues. Advisers stated that clients are frustrated by increasing paperwork and having their intelligence insulted that one fee form is replicated several times and then have to pay more for it. Data showed that advisers wanted [to cut] down the level of compliance paperwork [which] will help lower costs and retain lower balance clients to afford advice. They hope that this will be achieved with the new government.”

2022 and beyond

A new government and the pending QAR review does give new hope to the sector. Many of the major associations within advice, such as the AFA, FPA and FSC, have all issued submissions to Treasury. In fact, 12 associations — who make up the Joint Associations Working Group (JAWG) — put forward a joint submission, showing genuine collaboration and unity in the sector.

Almost all of the submissions have similar goals and recommendations for Treasury: fix the current regulatory model, amend education standards and address the declining number of advisers in Australia.

“The process revealed our collective willingness to work together, while respecting that we have different perspectives,” The Advisers Association CEO Neil Macdonald recently said on the JAWG submission.

“Importantly, what it revealed was that we all genuinely want a thriving, sustainable profession that improves financial outcomes for Australians.”

Though the QAR is not expected to be released until 16 December, if the recommendations put forward do take the issues into account and make attempts to rectify them, it will go a long way to improving the mental and emotional wellbeing for financial advisers who can then continue providing quality cost-effective advice for millions of Australians.

This article was first published in the ifa print magazine.

If you are suffering from depression, anxiety or suicidal thoughts, or you’re worried about someone else and feel that urgent professional support is needed, contact your local doctor or one of the 24/7 crisis agencies below:

Beyond Blue: 1300 22 4636 www.beyondblue.org.au 
Lifeline: 13 11 14 www.lifeline.org.au 
Suicide Call Back Service: 1300 659 467 www.suicidecallbackservice.org.au

Stress is increasing, mental health is decreasing: Addressing the wellbeing of financial advisers

default

ifa logo

Last Updated: 08 September 2022

Published: 08 September 2022

Neil Griffiths

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.

Source

Similar Posts