HFS Consulting data revealed at the Lifespan Financial Conference last week indicated that just 23 new advisers had joined the industry so far in 2021, while just 11 had joined in 2020 and seven in 2019.
This compared to almost 2,400 new advisers who joined in 2018 at the peak of the industry, prior to the introduction of the FASEA standards.
The problem of new entrants being discouraged to join was also exacerbated by the restrictive professional year standard, with just 83 advisers having finished their professional year since the FASEA standards began, Lifespan compliance and general manager Eugene Serravalle said.
“The FASEA website says they currently have 400 advisers that are registered and doing their professional year, so there may be a lot who are not on the adviser register yet, but that’s still only 400 compared to the thousands that are leaving,” Mr Serravalle said.
With adviser numbers having reached around 20,500 at the end of 2020 – down from 28,000 at the industry’s peak – and likely to decline by another 3,000 to 4,000 in 2021, it was possible total numbers could reach into the single figures by the time the final FASEA deadline in 2026 rolled around, Mr Serravalle said.
“Adviser Ratings’ prediction was 13,000 advisers at the end of 2023 and it looks like we’re on track to hit that. If that trend continues and you hit that next deadline in 2026, there will be some more advisers leaving and we could be at less than 10,000 advisers,” he said.
The large number of advisers still needing to pass the FASEA exam in the next seven months was still a major concern, with Adviser Ratings’ data as of March 2021 indicating that just 39 per cent of advisers from large privately owned dealer groups had so far passed the exam.
Aligned and institutional groups were faring somewhat better, with 60 per cent of large aligned groups’ advisers having passed, and 64 per cent of industry fund advisers passing the exam as of March.
While disappointing for the industry, Mr Serravalle said the current market dynamics represented “a great opportunity” for the advisers who would remain post-2026.
“There are no more bank advisers so if a client walks into a bank, what happens? Maybe you want to form a relationship with your local branch manager,” he said.
“The adviser exodus means there’s less advisers to service clients, so there are more clients out there to be serviced. Talk to your centres of influence, get your marketing in place, whether it be social, websites, community groups, schools – get your name out there and let them know you’re here to help.”
I am a bit disappointed that the first reaction of many commenting here is to increase prices to take advantage of high client demand and short adviser supply. Does this not reinforce the negative views people believe about financial advisers?
Not many I see .. but some A. The emotions and opinions run hot either side.
Yes I think it is a bit rich to bump fees up. We haven’t and won’t because we have a sustainable advisory, fee and service model. We value our clients and have their interests at heart even though our larger clients subsidise our lower fee paying clients in a smaller manageable book.
Most advisers increasing their fees aren’t doing so to profiteer. They are doing so to offset massive cost increases due to inefficient regulatory overhead.
AHAHAHAHAHAHAHAHA….Seriously our politicians are a bunch of morons
What about the politicians doing an ethics exam. Not many would pass I suggest.
“only 39% of adviser from large privately owned dealer groups had so far passed the exam”
Is there butterflies in anyone else’s stomach??
Thoughtless I D I O T S
it’s make it up as they go
Rules for ASIC & AFCA staff:
Rule 1. The adviser is always wrong.
Rule 2. If the adviser is right, refer to Rule 1
Rule 3. Charge the adviser for administering these rules
You know what that means everyone? If you have relatively mature business, Here is your free business strategy courtesy of an anonymous forum post. You first double your minimum fee, make the service uneconomical for anyone under $1m of assets. “Grandfather” existing client below the new minimum. As there will be plenty of demand given the laughable shortage of supply, you will now only let significantly more lucrative clients through the door. When you convert one client at your newly doubled, tripled or quadrupled minimum, you fire clients in the bottom 25%, perhaps do 1 in 5 out. Play the average revenue per client game until such time as your new bottom 25% are at your new minimum. The total revenue game is a mugs game and your life will get incrementally easier when average revenue per client goes up. Within 2-3 years you will have similar revenue and half the clients, with demand underpinned courtesy of our dear government, they have all but ensured this will be feasible. If your clients happen to have more than 2.5m, even better! close the door completely to retail advice, do not even bother with the farcical and soul destroying ordeal at all.
This is effectively the approach the big banks have taken with one fell swoop. They have ditched retail financial advice completely, and ramped up their “private banking” to provide financial advice for wholesale clients only.
This is an accurate assessment of where it’s at
We started doing this in November last year…its working well.
Well said and this is EXACTLY what we have been doing in our business over the past 12 months. We have already fired 30% of our client base and told them that unless we increase the monthly fee, they are no longer economically viable to retain. I hope the jokers at ASIC, FASEA, AFCA and Treasury are reading these posts so they can actually get down into the trenches and see exactly what damage is being done and who the biggest losers are in this situation, which is the very same group of people they all tried to protect, the poor vulnerable aussie consumer!
Well said BUT do you think ASIC, FARCE-IA, AFCA and Treasury really care. Of course not, they are self important, self absorbed govt employee bureaucrat hacks who ONLY want to ensure they remain relevant so they have their job next quarter or next review period. The last thing on their mind is TRUE client best interest – this is SO hypocritical and obscene it is beyond sickening. If I was wrong here you would NOT be seeing these hacks destroying our once great industry by driving advisers – LOYAL experienced advisers – OUT!
couldn’t agree more!
Thanks for this, but I already thought the same thing 12 months ago and started to implement this. We have noticed that new clients coming to us have been very large clients as well which has made this strategy work well. For example, a $5m SMSF client who we put on as a client effectively replaces the bottom 178 clients in our previous client set on a revenue basis…… YES, 178 clients!!!
Effective time management for us but I still feel that the Liberal Gov and that conflicted inept Hanye are totally wrong!
Now you can send those 178 low ball clients back to the industry super fund financial planners where they can get their non-conflicted product advice.
Any advisers planning to leave by 31 December 2021 really should leave before 30 June and avoid yet another useless and overpriced ASIC levy. Commiserations to those remaining who will pick up the tab.
Damn…never even thought of that.
The capital stack of fees earned in the industry is top down.
Product manufacturers
Investment products
Trustees
Licensees
Advisers
Clients
The decimation of adviser numbers will no doubt affect the significant inflows to products already identified, it will omit the opportunity for the low socio economic to seek genuine advice. Fees on insurance premiums will be greatly increased and products will move from 100 basis points to 200 plus, products will seek liquidity issues and insolvencies at the top level will be more present. Clients will lose money. Clients will be ordered to pay more fees and at times more than double. the ripple effect is moving toward catastrophic and the abundance of clients that will be left unserviced and orphaned and will be startling. That very last comment contradicts the regulators concern over the servicing obligations.
Fasea has not been thought out, it has not accepted the expertise of the greater unwashed and the intimate client relationships that have created this industry. It smells like Capitalism
What a human disaster in the making that promotes predatory behaviour making change upon change upon change dessimating the integrity of the majority who provide solid and sound advice.
Well done LNP – O’Dwyer Hume great policy
I cannot wait to jack up my fees in response to this. I am already starting to feel the excess demand for my service and I’m turning away more business than ever, as I honestly couldn’t be bothered servicing anyone who isn’t rich anymore. 8/10 people can’t afford my self and I don’t give a damn. My minimum fees have trebled since 2017 and they will treble again with 9k advisers! The impact the drop to 9k will have on prices is going to be insane, because the excess demand for the service is going to be extreme at those numbers. automated ETF salesman (robo advice) ain’t picking up the slack because they don’t give advice, they sell product for an ongoing asset based trail. Even if they wind back regulations, the price increases will be huge and I will never ever be rationalising my fees, no matter how much red tape is removed.
As anonymous names only…I’d love to know how many advisers who commented here plan to leave the industry either before Jan 1, 2022 or after they’ve passed the FASEA exam so they an tread water for a few years but then before Jan 1, 2026.
Personally…its FASEA Exam then I’m out. I WILL NOT be doing 8 university subjects where 5 aren’t even relevant to what I do.
Exiting before 2026 for sure, I’m targeting only wealthy clients to make my business more attractive to buyers, I will flog it in 2026 and out this miserable ordeal behind me
i commenced my departure in 2016 – finalised it in 2020. built up a new business that is 20 times more profitable and 20 times less work – i put that challenge out to advisers to do the same.
if i can do it – so can advisers
You’re so amazing. I really hope one day I can be just like you. You are the best financial planner in the whole world. I hope I covered off on everything you wanted to hear.
The self absorbed politicians and other assorted unsavoury public servants with their noses in the tax payer funded pig-trough – these are the reprehensible creatures responsible for this creation called FARCE-IA. It has NO client’s best interest at heart and these rules have been made up from thin air to suit the rulemakers who are wholly under-qualified (practically AND academically) to run ANYTHING, let alone the country! get THEM all qualified – THEN we’ll talk. Until then, stop this FARCE-IA idiocy and ineffectual meaningless FARCE of an “ethics exam”.
Article states: [i][/i][b][/b]The large number of advisers still needing to pass the FASEA exam in the next seven months was still a major concern, with Adviser Ratings’ data as of March 2021 indicating that just 39 per cent of advisers from large privately owned dealer groups had so far passed the exam.[b][/b][i][/i]
I would venture to suggest that only a small percentage of those ‘untested’ advisers will sit this ridiculous ‘ethics’ exam by end of year. This unnecessary, pointless and FARCE of an exam is an insult to experienced advisers being forced to leave the industry due to lack of exam-taking technique and use of tech to sit the exam properly. The politicians, public servants and special interest groups responsible for this tragedy should ALL be removed tomorrow (or at least forced to sit the exam themselves as most are UNQUALIFIED to do their job anyway.
Lets not forget the hand that the FPA played in all of this by pandering to the governments every whim and not standing up to them. I hope those still making their membership payments are seriously considering their options.
“Mr Serravalle said the current market dynamics represented “a great opportunity” for the advisers who would remain post-2026..” 2026 is long way off don’t know if this duck will hang around for that long and spend my days telling No to people who can’t afford my advice.
I’ll be 64….and in the words of a well known Beatles song….
Indeed . . . THIS duck certainly won’t be and that is a tragedy as I have many loyal clients that won’t afford advice when I leave end of this year due to this ridiculous exam. Calling it quits 10 years ahead of schedule (age 59 now) after 34 years. These govt hack creatures responsible should be removed from office. Clients are THE biggest losers in all this. Absolutely stinks that they and the big banks can get away with this fraud and travesty.
…but Stephen Glenfield keeps telling us there’s a enormous number of new entrants currently finishing off their studies ready to work in this new utopian FP society.
Isn’t it unethical to blatantly lie?
Ooops…
A disaster !!!!! FASEA is a con designed to cull the industry!
Let’s make Advice more Affordable Hume and ASIC Say.
Let’s do the exact opposite with ever increasing BS REGS and Red Tape Costs. But if we tell everyone we want Advice more Affordable, surely they will believe us regardless of doubling the costs.
LNP time to GO !!!!!!!!!!!!!!!!!!!!!!! 8 years of your BS Regs madness is too much.
Those new adviser numbers are hilarious, embarrassing, scary all at the same time
Very predictable though.
“While disappointing for the industry, Mr Serravalle said the current market dynamics represented “a great opportunity” for the advisers who would remain post-2026.”
Gee I’m fed up with industry people coming out with their ‘glass half full’ attitude to the opportunities in this industry in the future. Its just rubbish.
Seriously, it wouldn’t matter if there was only 1 adviser left after 2026 to service the whole of Australia. The process has been made so incredibly difficult, for such little financial return, where the adviser is still always wrong no matter how much effort they make to educate and explain everything to the client, that that ‘glass half full’ attitude just doesn’t cut it with me now. Its just total BS.
Don’t these people think the thousands of advisers that have already left and the ones planning to now leave wouldn’t have already thought of that???!!!
(Slow, slow clap)…well done Treasurer Frydenberg. Well done!
The above figures pretty much confirm you’ve now successfully managed to destroy an entire industry so all your banking mates can come back into the life insurance market in a few years time to rape and pillage Australian consumers like never before with their mediocre robo-advice models and make an absolute killing.
This is so much worse than even I imagined.
The documentary Inside Job comes to mind.
What an absolutely ridiculous situation. Cost of advice is going to go through the roof.
Ummmm, it already has!
My fees are going up (again) on 1 July 2021 when the marvellously thought through (new) FDS regime comes into place. I don’t make the rules – I follow them – and the clients pay for them.
This exodus isn’t down to FASEA. FASEA standards are the catalyst. The core issues rest with the compliance, regulatory and complaint regimes. The AFSL system is a disaster, with licensees continually setting new business rules to protect themselves while the advisers and clients continue to pay.
The BID should be simple: provide the best advice at the lowest cost possible. We seem to have forgotten about the importance of cost to consumers.
That’s not true. I have to charge my clients a lot of money to show them how much money I am saving them 😉
Sorry, far too much common sense there in your comment for it to have ANY impact on ANY politician to make a difference. I agree with you 100% though. The instigators and designers of FARCE-IA should be removed without benefits tomorrow for the damage to consumers they have wrought. they have no clue about a client’s true best interest. Shameful what is happening – our ‘leaders’ (cough) should be abjectly ashamed of themselves.
Narcicist do not have emotions…
This is a great comment summarising the issues.
Agreed. Many licensee rules and procedures are about protecting them. It has nothing to do with BID or what is right for the client. It’s broken.
Safe harbour is a disaster. BID should be repealed in favour of principles based COE, it’s the documentation and justification of your existence that makes this unviable
I’m yet to understand how they think this improves outcomes for the general public? Even if we manage to replace the advisers over time, the amount of experience being lost will not be replaced. Having a uni degree doesn’t not automatically make someone a good adviser. Life experience will trump a 3 year technical regurgitation degree any day.
we all know that –
I am a new entrant and my old degree suddenly became useful but they do not make it easy.
Mary run for the hills while you still have a chance.
Once the mayhem and destruction of the industry is complete, perhaps then will the Government try and unscramble the egg.
It’s scrambled. It’s done
The economic and social impact of this will be huge. I hope ASIC are proud of themselves. This is the end game they desired for so long. Australia is now a honey pot for fraudsters, cyber criminals and unlicensed shonks. Dodgy crypto floggers are welcomed by the finance minister, conflicted product floggers get exemptions from important consumer protections, while qualified, independent financial planners are in a red-tape straight jacket. And let’s not forget the life insurance industry is in a death spiral. Let’s call Australia what it is – The financial equivalent of Gotham City. A slow hand clap for ASIC and our dumb government.
You mention the life industry too – yep, I’m still trying to work out why life advisers are being forced to do the exact same exams and obtain the exact same ridiculously high degree qualifications as full financial planners that deal in wealth accumulation. Like making your local GP endure the process needed to become a brain surgeon, endocrinologist, ENT specialist and skin specialist all in one just to practice his simple but important chosen career. Financial planners and life advisers have two very different skill sets. These clueless politicians responsible for the whole FARCE-IA fraud truly have no idea and no idea how to act in the best interest of Australians.
A lesson to all. When ideological policy does not understand the reality of an industry.
What is the bet that banks lobby compliant politicians to change the rules and then fill the gap with a robo advice solution that is managed from offshore?
Ummmm have you not seen? Already underway. Comrade frydenberg wants to allow foreigners to operate without an AFSL.