The ratings group’s Adviser Musical Chairs Report for Q4 2019 revealed that 1133 advisers left the industry in Q4, while 4378 left over the course of 2019, leaving 23,639 advisers remaining in the market, the lowest number since December 2015.
The report specified that the institutionally aligned segment was worst hit by the adviser exodus, with 665 advisers leaving, seeing its share of the market decline from 28.4 per cent to 27 per cent. Institutionally owned advisers also left in large numbers, with 320 advisers, or 9.4 per cent of the total institutionally owned segment, leaving in 2019.
“This inexorable across-the-board decline is being driven by a perfect storm of factors including the major banks exiting wealth, removal or reduction of commissions, higher educational standards, and the challenges for many to restructure their advice businesses to remain profitable in this new ‘professional’ environment,” the report stated.
The number of advisers switching licensees also remained high in Q4, with 839 advisers moving over the period, which was significantly down on the 1,218 advisers switching in Q3 but higher than the 715 switching in Q2, the report said. In all, 30 per cent of the advice industry, or 8,500 advisers, either switched licensees or left entirely during 2019.
While large institutions such as Commonwealth Bank and National Australia Bank shed advisers in the largest numbers over the quarter, larger privately owned dealer groups including the Centrepoint-owned Alliance Wealth and Fortnum Financial Advisers were the biggest winners, adding 40 and 29 new advisers respectively during Q4.
“These two licensees are utilising ‘hub’ licensee offerings, which if the numbers are anything to go by are proving popular with advisers,” the report stated.
“Alliance Wealth … promote ‘self-licensee solutions’ and offer tailored licensee services which proffer to give advisers ‘power in community and strength in numbers’.”
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Next up adviser numbers drop to 5 yesr lows… 6 year lows… 7 year lows…
Has the FPA finally cottoned on that they are losing members (and potential CFP customers)?
The FPA actually has a large untapped list of potential CFP customers in its membership base right now. They’re called “grandfathered CFPs”. They were given CFP status 20 years ago with minimal education, as part of an FPA scam. These people should be forced to complete real CFP education requirements to retain their CFP designation. If they’re doing Grad Dips for FASEA they’ll get exemptions for most of it anyway.
Grandfathering of CFPs is one of the reasons FPA had no credibility in its lobbying of government on education standards. It’s time to actively right the wrongs of the past, and claw back some credibility. If they continually sweep this issue under the carpet and wait another 20-30 years for all the “grandfathers” to retire, the FPA will have disappeared first.
100% correct ! And the FPA were in breach of their own constitution in saying that all CFP’s are of the same standard. They are not !!!
I saw a recent article by a financial services recruiter saying he’s had hundreds of applications from advisers for compliance/remediation positions, but has struggled to get more than a few applications for new adviser roles at union super funds.
You can imagine the conversation… “Look I’m perfectly willing to degrade myself and become a social pariah if that’s what it takes to earn an income. But work for a union fund? That’s going too far.”
Wonder how many of the 23739 have done or r planning to do farsea exam?
Hey Govt.. Holden gone and now that you are killing the Financial Services industry, just watch the jobs go here. It will, however be much more than 800 jobs… it will be in the ,000’s.. keep ideological crap out of this industry
I can’t blame anyone for leaving. Sitting through the FASEA exam recently was enough to make me want to find a new career. In 13 years of graduate and post-graduate study, I have never seen such a poorly designed exam, with ambiguous questions and nonsensical answers just two of the many things wrong with that exam. Heaven spare us.
totally correct. I have so many degrees that it would put to shame most other “professionals” who have only one.
I sat the exam finished in two hours, and I thought to myself, of all the exams I have sat -probably around 50 in total, it was the worst most stupid exam of all.
the only pleasure i had in taking it was that it will blindside most accountants. so I did get some joy out of it.
couldn’t agree more…..absolute joke
Agree Steve, I have two degrees and nearly completed my Masters and have never walked out of an exam with absolutely no clue as to how I have gone. The breadth of study material was too extensive and all the Kaplan practice exams in the world do not look anything like the exam that FASEA served up.
One wonders about the relevance of the term “institutionally aligned”. If it just means the Big 4/5/6 then so what? Are clients somehow better off with a conflicted, vertically integrated, provider at size position 7 or 8 or 50? What is the statistical dividing line between an “institutional” vertically integrated licensee and a “medium” vertically integrated licensee. And should there even be one?
What really matters is whether or not the licensee is owned or commercially aligned with a product provider (including SMAs and SMSFs), regardless of any arbitrary “insto” size cutoff. By this more relevant definition many of the mid sized groups are really no different to the Big 4/5/6. Adviser Ratings’ statistics would be far more useful if there was a breakdown between “vertically integrated” and “non aligned” licensees.
Gee I wonder why?
and the response from govt on this tragic loss of expertise and industry impact is……
…anyone?….Bueller?
“O’Dwyer Rules!” Not really… She help create this mess.
This is just the tip of the iceberg
Advisor numbers will continue to decline with those leaving who are unable to pass the FASEA exam.
Best guess, as of 1 January, 2022 there will be approximately 15,000 – 18000 advisors.
18,000 is too high
Hi Phil, that is way too optimistic figure it will be down to 5,000 +- 10%, no more by 2026.
just can’t survive, it’s too difficult. remember that soon, not only do advisers have to opt-in clients annually, I believe the trustees on the product side will also have to ask the client to opt into the product annually as well if they do not then advisers won’t get paid, I don’t believe this has been discussed in great detail as yet
About 4,400 have already passed the exam. I think your gloomy assessment of numbers is a little dramatic!
Maybe. But the ones who went early are likely to be the more capable advisers. Pass rates are decreasing.
40 and 29 out of 1218 is ~3% and ~2%. Not really statistically significant.
and I would like to know how my Brand NEW planners were added to the Register… 1218 out and probably 10 coming in… Just crazy.
A 15% reduction over 12 months makes financial planning look like the manufacturing industry…..although probably a better future in manufacturing.
the slippery slide.. what did you expect!? It’s only going to keep falling.. the industry is just too hard.. too expensive.
So IFA have made up with Adviser Ratings now? wasnt so long ago there was nothing but beat up articles talking about how bad their data is. The data’s still bad, but the tune of IFA seems to have changed.