Adviser Ratings’ Musical Chairs Report for Q1 2020 revealed that the industry experienced a net decline of just 678 advisers by the end of the March quarter, compared with 1,133 advisers leaving the industry in the last quarter of 2019.
This represented a 2.9 per cent decline in adviser numbers over the three months, which was significantly smaller than the 16 per cent reduction that the industry saw last year. The report noted that it was possible increased demand for advice off the back of the coronavirus crisis was slowing down the expected industry exodus as a result of rising regulatory costs.
“The industry including super funds are reporting a huge spike in demand for guidance around issues like early release of super that could become the saviour of some advice businesses,” Adviser Ratings noted.
“Whether this COVID-19 inspired demand can postpone or reverse adviser decisions around exiting or switching licensees remains to be seen.”
Adviser declines were again most pronounced in the institutionally aligned sector, which shrank from 39 per cent of the total market at the end of 2019, to 37.6 per cent of the market by the end of March.
The privately owned sector also declined but by a smaller amount, having shrunk 9 per cent since the beginning of 2019 compared with 18 per cent for the broader industry.
Among privately owned dealer groups, those with 200 or more advisers were the only category to see significant positive growth in numbers over the first quarter of 2020. The report noted these groups could continue to benefit from the abandonment of self-licensing by some practitioners in the coming recession.
“In these economically challenging times, we are likely to see a flight to safety as advisers favour licensees with greater scale and stronger balance sheets,” the group said.
“For many, this safe haven may be quite appealing for those from institutional backgrounds who have since experienced the white-knuckle ride of their own self-licensed boutique. Having said that, these same licensees will be judged by how they leverage that scale to support advisers with services that help them grow their business and manage compliance.”
Some dealer groups outside the institutional space saw significant growth in adviser numbers as a result of corporate actions, with Interprac adding the most advisers in the quarter as a result of the sale of Yellow Brick Road’s Wealth division to its parent company, while Insight Investment Services gained the second highest number of advisers from its merger with Ausure Financial Services.
Much talk here as to how face 2 face holistic FP is in decline.
I think the apt anology here is that of a Boa Constrictor. A combination of the regulator, then technology, is putting old-school FP to a slow, drawn out sleep.
Welcome Open data and Self service.
This is aimed at the Adviser Ratings poster here….. Sorry but I’m not a Toaster Oven. Professional Advisers don’t appear on Adviser Ratings.
The irony we face is that our businesses are built on trusted long term relationships earned by good advice and service but we are now being regulated by a focus on cost and process to fit a formula. They are completely at cross purposes with our client value proposition and suck the joy out of what we do. Financial planning firms now need to be run by compliance tech heads whose skill sets do not match our client needs. That is not a business model that will work. The survivors will retain very small client bases and have the resilience to put up with all the BS. The rest will explore ways to move on. The industry is in survival mode at the moment as we all work out our next steps so I would not ready anything into the current adviser number movements.
Pool of AMP Advisers just waiting on the BOLR shenanigans to be resolved and they will go too. They don’t want to sit the exam.
13 years in the industry, in my mid 40’s – Passed FASEA exam – Unrecognised bachelor of commerce – unrecognised dip.FP – completed 3 of 7 Grad.Dip FP pathway courses… but pulling up stumps because completely disagree with the direction of the industry. The joy has been completely sucked out it by complete halfwits.
These numbers are a false dawn. Planners have put their plans on hold . Look at how many new planners are joining the industry is the real story.
It will be years before advice is affordable for all
And the big licensee’s are rubbing their collective hands together and the CEO’s getting ready to claim the great increase in profits.
As a licensee it really hurts to see young guys wanting to leave the business I have been in the business a total of fifty three years and have enjoyed every minute my advisors are doing there fasea take it from me do you never know what is around the corner if you need any guidance call me
They must want to hang around to pay their FPA fees seeing though the FPA really stands up for planners and doesn’t give in to detrimental laws that damage planners careers and livelihoods. FPA will be finished within a few years……
FPA members don’t pay for their fees. There bank owned licensee pays for their fees for them as a condition of employment. The CBA got out of jail, the FPA got compulsory membership, and you got FASEA. The FPA is quickly becoming the dregs of the advice world.
who says Covid19 is the reason? or is this just speculation by Jurno’s ?
more so, speculation by Adviser Ratings in a fight to show relevance to their upcoming IPO
An ipo..really? Its easy to get your name taken off thier list/ratings site, if everyone did that , they wouldnt be able to make money off our names for a start.
Dudes – Adviser Ratings is free for advisers and consumers. It’s a FREE marketing tool. Two things about horses – “you can lead one to water but can’t make it drink” and “you should never look a gift horse in the mouth”. Just the way it is with cynical grumpy old advisers I suppose. Seriously do not understand your animosity to a group trying to encourage more people to get advice. Dinosaurs. Did I mention it’s free? Sheesh!
When anything is “FREE” then you should realise that “YOU” are the product…
Adviser Ratings trashed advisers left, right and centre, then tried to position themselves as the only source of “trustworthy” advisers. They are yet another commercial offshoot of that slimy activist group Choice. Don’t allow these low life to profit from their indiscriminate slander of advisers.
spot on. and all the product providers who are lining up to be partners will then commence trying to use you the “trusted adviser” to flog their platforms.
Ok then, name one time [i]”Adviser Ratings trashed advisers left, right and centre”[/i][i][/i]. I’ve been on their platform for 3 years – never aware of any trashing, let alone left, right and centre. Are you posting from Rainmaker?
Lol you’re clearly disjointed from reality if you think they’re on your side here… Their history speaks for itself!
C’mon then – what history speaks for itself? I want to know why some of you think AR are that bad – what am I missing?
I suspect many “older” advisers (like me) are looking at a different form of exit, succession planning and a step back from the Coal face is one way of keeping the business, and yet reducing exposure to the dumb reforms being foisted upon us through knee jerk policy and law made on the run by a disorganized Government, (and opposition) a now over zealous regulator all causing more confusion, rising costs of advice delivery and downward pressure on Life insurance remuneration . just look how effective that has been in helping life companies grow their businesses. looking forward to the (inevitable) roll back of stupid reforms could be the thinking behind many choosing to stay ……. for now
Rollback will take years.
Maybe they are waiting to September when Job Keeper runs out.
I fail to see how the Early Release of Super could be a saviour for advice businesses, unless they’re charging $2,600 to help withdraw $10,000.
and then have ASIC chased them down in the press
Its got nothing to do with COVID-19. Those not wanting to do the FARCEa exam are waiting on the extension before exiting. Others will do the dumb exam to just have a few more years but won’t undertake the additional degree requirements. Either way I doubt there will be more than 30% of advisers still here between 2022-2026.
Agreed, even the younger guys are planning to leave soon. They can reskill elsewhere easily why stick around in this industry? There are no positives and endless heartache.
Yep, I’m in my 40s. I have a Masters in FP and have passed the exam. I have built a good practice and I am passionate about financial advice. But I want out. Two of my closet friends are in the process of selling. One will be on IP claim due to FP-induced anxiety and depression and the other is lucky enough to be in a position to retire, even though he wanted to keep working. So if that’s the way we are feeling, I can only imagine how older advisers closer to a natural retirement age and younger ones with less commitments are feeling. The comments from Adviser Ratings are laughable. This profession is like a zombie. It’s still walking but it is dead.
I can’t imagime why anyone coming out of VCE would choose financial planning as a career. I also can’t imagine why anyone age over 60 would remain in financial planning. Both very sad.
Have to agree with others here, like most articles on IFA, this is a self serving think piece by people with a conflict of interest. Uber-ironic.
I’m in the same boat! Finished all my education requirements just need to sit the exam but that won’t be happening anymore. I’m 35 and I can’t understand or see the benefits to this industry. This goes both ways, financially and emotionally…
Goodbye Financial Planning.
Have to agree with you Jimmy, I am also in my 40’s and in the same boat (although Grad Dip FP + FASEA exam passed). I love the professional relationships I have with my clients and I am a partner in a successful, large practice, but I feel burnt out and ready for a change. It’s a bit of a catch 22 situation, because I feel a strong obligation to continue to serve my clients, as there are many that rely on me heavily. But the stress of the job due to copious amounts of red tape and hoop jumping (little of which, if any, benefits clients) and flow on effects of that stress to my wife and kids is starting to outweigh that feeling of needing to stay simply for my clients sake. I have decided to give it 12 months and if my feelings do not change and spark does not return, I will be selling my client base and equity in business and doing something else more enjoyable for the rest of my working life.
I’d be interested in the results of a poll based on this…I wonder what percentage of us advisers have put a timeline on our decisions to go or stay…?
agree
get ready for a big drop off… There is really no point being in this industry anymore. You’d be better served getting a psychology degree and helping people that way than work through this over regulated nonsense.