Mayflower Consulting managing director Sarah Penn said that while the incoming standards for financial advisers will see a slight uptick in the number of advisers retiring from the financial advice industry, it is unlikely to be anywhere near some of the initial predictions that were made when FASEA started releasing its guidance.
In 2017, there were estimates by various commentators and academics that a significant chunk of advisers would depart the industry, including Deakin University associate professor Adrian Raftery, who estimated that between 21 and 34 per cent of advisers would leave the advice industry due to the mandated education requirements.
“When the changes started coming through and the industry wasn’t quite sure where they were going to settle, a number of advisers that I spoke to were telling me that they had had enough and were going to sell their businesses,” Ms Penn said.
“Now that the dust has settled [though] and everyone has had some time to think about it, interestingly, a few of those advisers are now saying, ‘You know what, I’m going to do the units, I don’t really want to, but I’m not ready to throw in the towel with my business just yet, so I’m going to go ahead and do the course’.”
Ms Penn said she thinks that some of those previous estimates may have been “grossly overstated”.
“I think when push comes to shove, people do want to keep running their business and looking after their clients and doing their own thing and not working for someone else, which are all of the reasons that they got into it in the first place,” she said.
“So, I think the way that will play out is that people will just get with the program, and will go and get the degrees that they need to.”
She expects that the response to the FASEA standards will be a similar outcome to what happened with other significant reforms to the industry, such as the Financial Services Reform Act, which commenced from 2002.
“That was another massive change to the way that financial planning businesses were organised, and it was essentially the start of dealer groups and PS 146, which is now RG 146. At the time, there was exactly the same talk about everyone leaving the industry. Then nothing happened,” she said.
“We also had a mini version of that with FOFA and again nothing happened, and now we’re going to have it with FASEA. People retire and leave the industries all the time, and there might be a bit of an uptick, but I don’t think it’s going to be a massive change.”
If the only headwind was FASEA I would agree. However all large licensees are tightening their supervision and monitoring regime, and this will trickle all the way through the industry, cost to serve is going through the roof and will increase further once cross subsidisation of trails disappear, and lets face it the kind of students likely to leave school and do the FASEA quals is very likely to deliver highly qualified planners that cannot engage real people!
We’re facing a 70% drop me thinks!
Wasn’t one of the intentions of the rule changes & lift in education standards for “some” advisers to leave the industry. So why is it a surprise that “some” are leaving!
Is someone going to investigate non payment of wages of one of the board member of FASEA, former business owner?
Comparing having to undertake RG 146 to FASEA, FOFA, LIF and now the post RC recommendations including to ban risk commissions is like comparing your business being held up by a 4 year old with a water gun as apposed to a gang of mafioso armed with sub machine guns!!
The parasites and cockroaches that feed off this industry but don’t actually advise are becoming more and more delusional by the minute!
Dream on! Its not just FASEA its all of the other issues too as to why there WILL be a mass exodus of advisers including the obvious – Average adviser age. I would personally know around 40 advisers and there are only 2 that I know planning to stay and both are lucky enough to have an appropriate degree and are in their 40’s. Why would risk advisers spent $1000’s obtaining a useless degree with the threat of risk commissions being abolished in two years? Why would they anyway with the LIF making it unprofitable to write business. Why would someone in their 50’s choose to undertake just for a few more years in a defunct industry. why would new entrants choose this industry?
My prediction is that there will be over 50% fewer advisers in this industry in 5 years and of course only the rich will be able to afford advice.
But hey bury your head in the sand to facts and dream on!
She got this wrong. FASEA is just 1 of a multitude of battles Advisers are and will face over the coming years. The tough entry barriers for new entrants will not compensate the mass exodus that will occurr. The advice industry resembles a dictated communist controlled industry. Centrally planned and governed by HQ canberra, controlled revenue and dictated how we get paid, how we operate, and represented by an ever obedient FPA that dare not question HQ on anything. Change is good, progression is great but above all commonsense is what the world needs!
FASEA = Freaking Arrogant Senseless Errored Administrators.
How about FASEA started with the most extremely stupid position of any degree older than 10 years would not count for anything, Adv DFP’s would not count for anything, CFP’s would not count for anyhting, etc and on those rules many more advisers would have left rather than re-complete very expensive study already done.
Now FASEA have finally taken a more sensible approach to most past education.
Mind you after 2 years of complete and utter government style BS has been endured to get this far.
But yet we still wait for approval of specialist courses, like SMSF specialisations, etc to be approved and acknowledged.
Given the Uni’s need to develop bridging courses, it will be 3 full years from the start of FASEA until people can study with real conviction of knowing it will be FASEA approved.
Will FASEA extend the time to complete deadlines by these wasted 3 years
History repeats.
Facts don’t change.
Biased optimism is always present.
I fear the future will be aligned with the past and it won’t age this hunch well.
i think her business depends on advisers staying in the industry so she has to be optimistic
More comments from someone not in the “trenches”.
Just more hot wind… there will be a reduction and consumers will ultimately pay for it
Overstated??? More like understated. Last time I checked the average age of a life insurance adviser was 58. This would represent a huge number over 60 and into their seventies. With 30 years experience in some cases are they going to spend mega dollars on education, give up valuable work time for study just to obtain the qualifications to continue at a higher age in the future?
Yeah that was before they were talking about getting rid of risk commissions but still want all the same paperwork to deliver that advice and then you have mysuper advisers giving advice with no paperwork no soa or roa crazy
Consultant on what? Sarah it’s not just the education standards it’s also the exam (worse than the education uplift in my view) and the likely removal of ALL commissions AND the shift to annual renewals for fees. AND if you are not yet aware of the uplift currently being tested on BID by ASIC then you’re living in dream land. The UK went through almost the exact same process in 2009, implemented in 2013/14 and 20-30% of Advisers left the industry…a large chunk from the banks but all the same a very similar number to the initial reports Sarah and their uplift and changes were smaller than ours!!…it’s one thing to bolster your resolve and say “I’m gonna do it!” and then actually doing it…I said last year I’d stop eating donuts and felt sure I could do it…the doing was harder than the saying…just saying
Another consultant with a vested interest saying all is good. Surprise surprise!!
Can anyone with a hunch publish an article on IFA?
Another in with there head in the sand?
So, they look at one issue (FASEA) and apply that as the only issue why an Adviser might leave. Yes, I thing their head is buried (in what I don’t know).
Yep.. there are numerous things coming… fasea will be like having a Sunday stroll compared to everything else
dreaming- everyone is exiting. only people who will stay are advisers with no other options.