More importantly, it is becoming a barrier to attracting, developing and retaining the next generation of advisers our industry desperately needs. We need to flip the model so our industry is seen as a meritocracy, that rewards performance.
Clients do not judge advisers by the number of years they have spent in the profession. They judge them by the quality of advice they receive, the outcomes achieved and the confidence they provide when navigating increasingly complex financial decisions. That is why their employers should do the same.
Financial advice is facing a growing talent shortage
The financial advice profession is facing a significant talent challenge. Adviser numbers have fallen dramatically in recent years, while demand for advice continues to grow.
According to the Financial Advice Association Australia (FAAA), adviser numbers have fallen from almost 29,000 in 2019 to around 15,000 today, representing a decline of nearly 48 per cent . At the same time, Australians are facing increasingly complex decisions around retirement, wealth creation, and the intergenerational wealth transfer.
Advisers are also operating in a more demanding environment, balancing heightened regulatory requirements with a broader range of investment opportunities, including growing client interest in alternative and private market assets.
The reality is we need more advisers entering the profession and we need to create environments where talented people can progress quickly. Young advisers are often expected to spend years climbing a predefined ladder, with remuneration tied more closely to tenure than the value they deliver to clients and the business. This is where a merit-based approach to pay structures can really set our industry apart from other professional services.
As an industry, we are increasingly finding that talented advisers who do not see a clear pathway to progression are leaving for other career opportunities. Without reversing this trend, we risk creating a real problem for everyday Australians wanting access to financial advice.
Rewarding contribution, not tenure
Many advice firms still operate remuneration models where bonuses are tied largely to overall business performance or seniority rather than individual contribution.
Speaking to many advisers, particularly high-performing young advisers, this is a disincentive. Those who are looking to work as hard as possible to get themselves ahead are essentially penalised by these bonus structures, leaving them feeling dissatisfied with the process.
If we are to get more young advisers into the industry, we need to be able to show them that the sky is the limit from day one and that if they work hard, they will be rewarded. The advice industry needs to be a meritocracy and this model must become the industry standard to help attract and retain good advisers.
Experience certainly matters and it must still be a key element of the renumeration structure. Wisdom is earned over time and there is no substitute for having navigated different market cycles, client situations and economic environments. However, experience alone should not be the determining factor in determining an adviser’s pay packet, it should be in addition to their outputs for clients.
Building high-performing advisers from day one
At Integro, we believe attracting and retaining the next generation of advisers starts long before they become fully qualified.
That is why we established the Integro Academy and built partnerships and adviser pathways with leading universities including Curtin University and The University of Western Australia. These partnerships allow us to identify talented individuals early, provide practical industry experience and help them develop the technical, commercial and client-facing skills needed to succeed in advice.
Rather than spending years confined to administrative roles, Integro Academy participants work alongside experienced advisers and gain exposure to investment management, wealth strategy and client engagement throughout their development journey.
Importantly, that development is matched by a remuneration model that rewards contribution, capability and results. We believe talented professionals should be recognised for the value they create, not simply the number of years they have spent in the industry.
For firms looking to attract and retain ambitious advisers, investing in early development is essential to building the next generation of advice professionals and ensuring the industry has the talent needed to meet growing client demand.
The future of advice depends on it
Attracting new talent is only half the challenge, retaining and developing it is just as important.
As the industry works to address Australia’s growing advice gap, firms need to rethink how they can develop and reward advisers with a merit-based approach. The most successful businesses will be those that recognise capability, reward contribution and provide clear pathways for progression.
Justin Gilmour, managing partner at Integro Private Wealth
Why would anyone choose to become a financial adviser today? The entry pathway for new advisers has become unnecessarily complex and burdensome — a mandated degree, the FASEA exam, and a full 12‑month professional year. On top of that, advisers face an ever‑increasing compliance load, the removal of managed‑fund commissions, and the real possibility that risk commissions may also be abolished in the future.
Add to this the rising cost of PI insurance, the introduction of the Compensation Scheme of Last Resort, and the constant regulatory pressure, and it’s no surprise that many people conclude it would be easier to study law, engineering, financial analysis, or pursue a trade instead.
This is precisely why adviser numbers have collapsed from around 29,000 to roughly 15,000 on the ASIC Financial Adviser Register — and the trend is still downward. There is simply no realistic scenario in which adviser numbers increase under the current regulatory settings.
Many are called but few are chosen.
Greg, Well stated. I couldn’t agree more. I left in 2021, at age 60. At the time many thought I was retiring early after 36 years in our ‘industry’. I feel I should have done it 5 years earlier! I don’t say ‘profession’ as it is STILL a clownworld ostensibly controlled by special interest groups and politicians. There was a time when we advisers could indeed focus on meeting clients but now the admin and paperwork burden is such that it is, for many, more time than client meetings – especially independent lone single advisers.
One of your points – risk commissions – will see the remaining small few of risk specialist advisers leave en-masse if commissions are stopped. Unless fees are amortized by investment advice and financial planning advice them risk advice has been shown time and time again to be non-viable as far as fees are concerned. I wonder if the life companies execs will roll-over compliantly and allow this like last time? Last time didn’t work out too well for them so it will be fascinating to watch and see what happens now.