The Adviser Ratings’ Advice Landscape report predicted that given current exit rates from the sector, and the group’s data around how many practitioners were planning to stay in the industry, just 13,154 advisers would be left in four years’ time, compared to 20,764 at the beginning of 2021.
The report found that exits were particularly common among risk specialists, who were exiting at a rate of 2.4 risk advisers for every one financial planner.
Assessing the “average” adviser in today’s market, the report found that the typical adviser was 48 years old, male, Victorian-based and typically serviced clients who were couples with an average age of 58.
Adviser Ratings founder Angus Woods said while the typical demographic in the industry was set to change as more advisers exited, the small number of graduates lined up to enter the sector was a big concern.
“We expect the balance to be redressed in the next year, as many of the older advisers hang on right until the end of the year,” Mr Woods said.
“That said, there will be a lack of entrants coming through with only 900 advisers studying FASEA approved degrees, of which only half will enter the industry.”
While the majority of advice clients were still pre-retirees and retirees – with 23 per cent of advised consumers being between 55 and 64, and 17 per cent over 65 years old – the report revealed there was significant demand for advice in the younger generations.
Around 34 per cent of those aged 25 to 34 said they would be open to seeing an adviser, while 45 per cent of under 25s were also interested in seeking advice.
Mr Woods said while advisers had been besieged by short-term worries in their business in the current regulatory environment, it was important practitioners had an eye towards the future and capitalised on younger prospects’ interest in their services.
“That has been one of the biggest surprises from our survey – the willingness of young people to seek advice,” he said.
“Advisers should be proactively addressing what is going to be the biggest transfer of wealth in history – from older retiree parents to their children. Much of this is not on the radar, as advisers battle compliance burdens and what is perceived to be a zealous regulator, bent on strict compliance to legislation.
“Until we have a psychology shift from both advisers and regulators and a willingness to adopt technology to reduce cost barriers, there remains a lost opportunity here.”
The report also revealed that large non-aligned licensees now made up the biggest sector of the market, with 3,987 advisers belonging to a dealer group that was privately owned and had 100 or more authorised representatives. Aligned groups such as AMP Financial Planning and Charter made up the second-biggest segment with 3,882 advisers.
Mr Woods said with privately owned dealer groups now ruling the roost, the priorities of businesses would shift towards efficiency and flexibility as advisers were less encumbered by the priorities of their parent companies.
“There will be a raft of new investment products, technology solutions and consultants. We will see more open APLs and a willingness for quick unencumbered decision making as advisers fight for their own survival,” he said.
“As advice will be in demand for years to come, it presents an opportunity for new products, solutions and business models, ie the continued move to MDAs, to cement themselves as part of a new era in advice.”
Another hurdle is how vague and bloody time consuming it is for a firm to blood a new entrant. A young chap at our firm has been doing his role for over a year, now has to logbook it all and start from scratch, another 12 months of the same job, very disheartening for him. The time it takes for a firm to build and then finalise the Professional Year structure is absurd.
If we could clean up the FASEA education units for existing advisers & change the Haynes 2 “opt in” to be signed once every 60 months, you could pretty much solve the problem. Until that happens, smaller low income families are going to be selectively declined & referred back to their local Member of Parliament.
Its a lot more than that. Parts of the Code are simply unworkable. Why is an RoA required for intra-fund advice ? Ridiculous and expensive for clients. Lots, lots more needs to be dome to fix this profession.
If you’re seeing your clients every year, why is it difficult to have them sign an opt-in every year?
Are you saying you don’t want to have to justify to your clients what value you provide for 5 years?
Sure, this will make it easy for you to take your fees, but I suggest you get with the times. This is 2021 not 1945. The era of just clipping the ticket on the way through are gone. Just like the animals in Animal Farm, clients are rebelling and expecting more value.
What other business has to “justify their value” in a regulatory prescribed manner at all? Businesses provide services to clients. If the client sees value they keep paying. If they don’t, they cancel. Simple.
Opt-In is just another mechanism designed to make it more complicated and expensive for consumers to access professional advice. It is designed to benefit union funds and junk insurers, who use advertising and PR to deceive consumers.
Very interesting additional figures discovered today at an industry event. For every 1 Financial Planner that leaves the industry in the VERY near future, 2.4 are Risk Only Advisers.
This continued exodus is expected to result in an extra $13.1 Billion in social welfare costs to whoever the Federal Government is in the future. Personally, I don’t care who that Government is now – I’ll also be leaving in the near future so my life-long alignment to the Coalition has well and truly dissolved.
I was laughed at when I predicted a final number of 10,000. That was 2 years ago.
I think climate change has a lot to do with the exits. Too hot in the kitchen.
All that experience lost for what? keep kicking the industry in the guts!
Why waste time in financial planning?
Law is far more rewarding and less regulated.
No one wants to be under scrutiny over their professional judgement and fees constantly by bureaucrats applying hindsight judgement.
This dissuades those younger people when considering a profession.
Money coach is even easier.
Lol if you think being a money coach is a viable option it’s why you also shouldn’t be a planner
13,154 advisers left seems optimistic. The way things are trending it will only continue to dwindle down to extinction. The professional year makes it virtually impossible for new entrants. Other than being beneficial for industry funds it’s hard to work out who actually wins out of this mess. It’s certainly not the client or the average Australian.
The state will also suffer by less policies written= less stamp duty income. Not to mention the number of widows and orphans begging Centrelink for a pittance which should cost the government sorely. No advice = no insurance or incorrect insurance and incorrect levels of insurance
I have always said 10,000. That number is optimistic. 2 sittings of the FASEA examination remaining. How many have not sat and/or passed ?
As a casual Uni academic pre FASEA I had 100 students where 50 of them told me they loved the Unit and didn’t want to be Accountants, they now want to get into financial planning. Post FASEA, that number is Zero because of the specailist educational requirements, and the Uni simply dosen’t offer all the FASEA Units to be an approved degree. Students saying they’ll stick to the broader Commerce Degree with the ability to do further education later on…that pipeline entering the industry is going to be a real problem, especially if your in non metro.
Dropkick regulators out of control, experience nil, never built, created, developed, or purchased a business in there life, being led by what history will have to show as the worst goverment our industry has ever seen, it makes the Labour parties FOFO of 2013 seem like nothing other than a nice friendly sunday picnic compared to what this LNP has allowed to happen to us, i hope they get thrown out on there ear at the next election, footnote, i have been in this Industry since 1979, and i have handed out there brochures on polling days for over 25:arrow::arrow: years, do you think that will ever happen again!
“That said, there will be a lack of entrants coming through with only 900 advisers studying FASEA approved degrees, of which only half will enter the industry.” [b]of which only around 50 will make it as planners ..[/b]…
“Around 34 per cent of those aged 25 to 34 said they would be open to seeing an adviser, while 45 per cent of under 25s were also interested in seeking advice” [b]but they don’t want to pay for it [/b]…..
I don’t think I will ever retire via the sale of my business (I’m 46 and male) …. Maybe just hand in the keys at the end
LNP, ASIC, FARSEA, AFCA, Choice, etc
You must be so proud of your efforts to destroy the Advice industry.
We will direct younger, smaller and all clients no longer able to afford Real Advice directly to contact you for Advice.
Or to the nearest Robot.
Good luck in your new Adviser roles,
Canberra bubble Bureaucratic morons :-/
I reckon you can add the FPA to that list. Up until the banks exited the industry, they were financially conflictedly beholden to them, and not the advisers they were meant to serve.
Many of those bodies were merely following the recommendations of the FPA. The FPA clearly believed it could increase membership by siding with the CBA in calls for higher education, and making money via it’s FPEC body. The FPA called for prior learning and your experience to be 20 points out of 100 and the standard to be a Bachelor of Financial Planning, which was fully adopted by FASEA based on their submissions.
you left out the FSC and life insurers from this list of culprits
Is it any wonder with the comings and going’s?