The knowITdigital whitepaper suggested that the number of advisers in the industry in 2030 will be lower than is currently the case.
While the exodus of the early 2020s will not have been fully reversed, it said a steady flow of new, younger advisers will see the numbers back above 20,000.
“This lower baseline of adviser numbers will reflect the reduced areas in which advice can be provided to middle Australia in 2030,” the whitepaper said.
“Advice on non-SMSF super will be largely the preserve of the super funds and insurance advice will be a very small fraction of total advice provided.
“The Professional Standards of Financial Advisers reforms will reduce the competition in the advice marketplace, but the post-banking royal commission and Productivity Commission reforms will shrink the size of the marketplace.”
The whitepaper noted the Hayne commission’s assertion that there were 25,386 financial advisers registered in Australia in April 2018.
It said it was probable that the eventual reduction in numbers would be somewhere between 35 and 50 per cent at the peak, resulting in an eventual adviser population of between 12,500 and 15,000.
Further, the whitepaper cited a CoreData report that “clearly identified that advisers’ level of desire to leave the industry was split along age demographics”.
More than half of advisers aged 60 or older surveyed planned to leave the industry in the next five years, while this percentage fell in each 10-year age bracket, down to less than 5 per cent of advisers in their 30s, and almost no advisers in their 20s, planning to exit the industry.
“The upshot is that adviser numbers can be expected to drop significantly in the short term, led by the large departure of older planners and that the average age of planners will reduce significantly,” said the whitepaper.
14 years ago a Senior Consultant from the St James Ethics Centre told me “The biggest ethical problem in the financial advice industry is that planners are more concerned about Compliance than giving their Clients good advice”. Surely this serious problem is getting worse?
spot on comments below – if you’re not finding the compliance and BID uplift prohibitive then be afraid…it’s likely because you’re not meeting the requirements…and everyone is seeing what ASIC do when they smell blood.
I’m surprised to learn that I am the one in twenty “30’s” leaving as anecdotally I would say it’s about 1 in every 3 people I speak with at PD sessions or in conversation.
I don’t even need to take anything but the ethics course, but the cost to serve has become so prohibitive, and the potential liability unlimited in scope, that there isn’t a business to grow long-term for most of those looking to continue. If you can charge $10k plus pa, maybe, but there’s not an unlimited supply of HNW’s.
interesting stats… had a preso from Radar Results that suggest that the largest cohort by age leaving is the 35-45yr olds. Those who see a career change as possible owing to time to learn. the next largest was the 55+ as expected. So, just how many are going to be left? Who will buy the client revenue? I see amalgamation and AI (Robob advice) being the force behind advice. it will be interesting. As for new entrants… why would anyone come into our industry with such a large liability and heavy handed compliance? Ideals and desire to help people does not trump the downside. If the compliance is automated or watered down, plus client responsibility brought back into the equation, then it will attract recruits.
Question, where are the new advisers going to go to get their professional year? Gain the experience needed, be mentored? What small advice businesses will be able to afford to carry the startup costs for a graduate?
The opportunities for graduates is going to be very limited I fear, and I worry for the next generation.
Sadly I fear even these numbers are optimistic.
there is now way there will be 12,000 left. Mark my words, no more than 5,000 will be able to remain. those 5,000 will already be very highly qualified and they will already be servicing the VHNW. others just won’t survive
This data does not take into account Advisers forced out as Banks re-assess lending criteria, annual opt ins kick in and those planners that just can’t get through the exam or get punted by their current dealer group for failing to adequately apply BID requirements….plenty of Advisers will be thinking positive but just won’t make it. This industry already places such a large compliance and legal obligation on planners – so utterly exposed are they to clawbacks, claims for fee refunds and so forth it won’t be worth the effort and only those clients prepared to pay $4-5k will get advice…the rest will prob just rot