It is no secret that financial advice is an expensive profession. A luxury for those who can afford it and totally out of reach for many more, the “advice gap” is a topic most advisers are likely growing weary of hearing, yet it remains to be a significant obstacle to helping get the profession back on track.
Speaking at the 2025 Wealth Management Summit, Praemium chief strategy officer Denis Orrock said the “enormous advice gap” is only getting bigger.
“Unfortunately, financial advice is becoming a luxury, and I don’t know how Australia is going to bridge the gap in anytime soon,” Orrock said at the event.
“In fact, I tell all my kids to become financial advisers, because there just isn’t enough.”
The advice gap, partially caused by the unaffordability of advice to the average Australian, becomes an even bigger obstacle when considering the cost of being an adviser. ASIC fees, the Compensation Scheme of Last Resort levy, licence fees, paying for external expertise and other costs make being an adviser an expensive professional route to follow and, as Orrock warned, most advisers are not servicing enough clients.
“We’re servicing maybe 30 or 40 per cent less customers per adviser in Australia than we are in the UK,” Orrock said. “We actually think, just to service the high-net-worth market alone, Australia is about 8,000 advisers short.”
For Orrock, skewing to the high-net-worth market is one solution to solving the issue of advice firm expenses, saying: “I’ve yet to meet an adviser that says they want 1,000 customers at $10,000 each. They want 100 customers with a million dollars each.”
Though in the short term this solution will not fix affordability for those clients with less money, it does allow advisers to generate more for their businesses, potentially opening them up to serve a wider clientele in the future.
Also speaking on the panel, Federation Asset Management head of distribution Cameron Farrar suggested a more novel approach to closing the financial advice gap: “I reckon the banks actually have a role to play in providing advice to those Australians that have been locked out of the advice piece.”
Other suggestions for helping close the gap includes advisers putting aside profit maximisation occasionally and opening their practices to more pro bono work. While this solution would likely help close the advice gap, it does little in the way of helping advisers meet the costs of running their practices.
