Speaking on a recent episode of the Wicked Problems, Visionary Investors Program — founded by Evolution Media Group, ausbiz and Adviser Ratings — Financial Planning Association (FPA) CEO Sarah Abood said that accessibility and affordability issue will intensify as more Australians enter retirement.
“By 2026, according to the ABS, we’re going to have 137,000 Australians every year turning 65. So that’s not the only trigger for advice, but it’s one of them and you would need 1,100 new advisers give or take, every year, just to serve the new demand that’s coming online every year,” Ms Abood said.
“Right now, we don’t have very many advisers and planners. In fact, the numbers have halved in the last couple of years,” the CEO reiterated.
Since 2019, the number of advisers has plummeted from nearly 30,000 to under 16,000 today.
“Things are going in the wrong direction. Demand is going up, supply is going down,” Ms Abood said.
And although bodies like the FPA are working on replenishing the industry, Ms Abood stressed “it takes a while to grow a new financial planner”.
“Those education standards are high … so it’s not something you can just get tomorrow,” she said.
Touching on whether superannuation funds could become the natural owners of financial advice in the near future, Ms Abood said she doesn’t believe so.
Instead, she said that she sees “these organisations needing to work very closely with advisers”.
“I’m not sure that there’s a natural owner of advice, because financial planners and advisers are professionals and there is no reason why we wouldn’t be evolving in the same sorts of firms existing in say the legal profession [or] the accountancy profession, where advisers are coming together and creating their own firms and partnerships,” Ms Abood said.
“And in fact, that form of advice is probably the fastest growing right now. Advisers are heading out and licensing themselves. I see that accelerating already and I think that will continue.”
The CEO also spoke about the Quality of Advice Review (QAR), flagging its “critical” importance especially when it comes to creating more favourable conditions to encourage more digital providers to enter the space and alleviate the stresses placed on advisers.
“By implementing some of the early recommendations that have come out of this review, I think it does offer a great potential to give some more confidence to the digital advice providers to build more tools that can do more for consumers, and I think that helps planners a great deal as well,” Ms Abood said.
Joining Ms Abood on the program, Midwinter’s CCO, Steve Davison, stressed that firms need to feel confident to invest in technology.
“Leaning on the proposed changes in the Quality of Advice Review and Midwinter’s digital advice capabilities, we are on a mission to change this by providing advisers with the technology they need to provide affordable advice solutions,” Mr Davison concluded.
Last month, Midwinter flagged concerns with a key recommendation in the QAR proposal paper.
The QAR proposal paper suggests removing the requirement for statements of advice (SOAs) to allow the profession to provide financial advice in a way that suits their customers. However, in an emailed statement to ifa, Mr Davison, argued that customers will still want — and need — to be provided with an artefact.
The FPA backed the removal of SOA in its own submission, but noted that it should be replaced by a record of the advice provided to the client on request.
so let me see, the ivory tower has spent the last 5 years raising the bar, making it all professional, making sure we have a draconian code of ethics ( what a contradiction in terms that is) – despite many protests being raised that creating barriers to entry to properly act as a qualified adviser – even creating a “special term for advisers – a protected species if you will, and through this creating hurdles of cost to the clients. At the very first hurdle – it all gets too hard _ it is laughable at the outcomes. At every turn where common sense was introduced – it was trampled by zealots. Sad thing is – there is blood on their hands – many good people ( IFA’s and business owners) with their families driven to the edge, many practitioners with a lifetime of work trashed. Once again – no one is held to account. And here we have another lawyer from the Ivory castle that couldn’t join the dots. – If you are not properly trained or licensed – you shouldn’t be giving financial advice – and that includes bank – and most particularly the ISN super funds. I would recommend Ms. LEVY – try contacting a few advisers that have tried to work with industry funds – a laugh, a disturbing tale of apathy and self-interest.
This is a complete fantasy as there will be very few new advisers over the coming years.
This industry has been destroyed along with many good people suffering from extended and elongated burnout, mental illness and depression caused by relentless change,
persecution and meaningless & misguided
regulation.
Surely the pipeline of new Advisers Ms Hume & Frydenberg set up will solve that…….huh huh.
Be lucky to be 100 over last 3 years, so yeh running at about 3% required.
Great job Ms Hume, Frydenberg, ASIC & FARSEA.
So true and they wiped their hands clean of the issue.
As a participant and business owner of 25 years I can tell you the events of the past four years have signed the death warrant of the advice industry Over zealous compliance, unreasonable education requirements and the exam….the exam…what real purpose does it serve The retail providers are happy now to transform themselves into advice free high cost investment facilitators in their products and platforms….the significant industry funds are the future of investment and advice
WHAT A SICK JOKE.
They are dreaming if they think they can get 1,000 per year and even if they could they would be so inexerienced that really how much could they do?
No one will enter this industry with the red tape and compliance the way it is. Who would ?
We won’t have them because 1,000 people per annum are not stupid enough to become a financial planner like I decided to do.
This will only be solved if the ridiculous Annual Renewal Fee Consent forms are completely eliminated. Australia is the only nation in the world that has done this, and simultaneously decimated 30% of all advisers, greatly reducing the supply of advice to Australian investors. Which has become highly inflationary, increasing costs to consumers. What an epic fail.
The figure is much higher than 30%
I often hear about this supposed demand for financial advice but nobody’s kicking down my door seeking advice. In fact, I’ve spent thousands of dollars trying to attract clients but nobody’s biting.
The primary reason advisers are leaving the industry is because they can’t attract enough paying clients to cover their unbelievably high costs of business.
Well that’s my experience at least.
Ok not sure why that’s your experience but we are getting plenty of new client queries and new clients with zero advertising
agree, we consistently get 7-9 referrals each week, yet we turn most away as we have limited capacity. The very best ones with we agree to take them on in 3-4 months time (once we’ve created capacity to serve). Capacity is the challenge as it’s timely taking on new clients.
I’ve had about 15 new clients through Adviser Ratings and LinkedIn this year. Never had it so good ?
We’re the same. Turning away clients almost daily and firing clients who prove to be difficult in returning compliance paperwork…
We have 122 clients in our one man practice…we have ‘better’ more engaged clients waiting in the wings to take the place of those clients who leave.
how many are servicing those clients ?
We’re getting plenty of enquiries but when the minimum upfront fee of $5,500 and ongoing fee of slightly less are advised they disappear. Fix the compliance and you will fix the issues.