The number of financial advisers that will leave the industry over the next six years “cannot be understated”, according to a business broker specialising in accounting and financial advice firms.
Connect Financial Service Brokers chief executive Paul Tynan said mature age advisers, education requirements, demands of the industry exam, the demise of Dover Financial Advisers, the royal commission, grandfathering, and excessive compliance and regulation will be a “perfect storm” for the advice industry.
“Added to this scenario is a total lack of understanding and appreciation of the role and importance of the advice sector that will see an exodus over the next six years of more than 50 per cent of the current force of financial planners,” Mr Tynan said.
“The timing of this self-inflicted disaster couldn’t come at a more inopportune time for the Australian economy and financial services sector as the need for professional advice will significantly escalate as the Baby Boomer generation moves into retirement.”
Over the next four decades, Mr Tynan said, there will be unprecedented demand for new channels of advice in aged care and residential living, assistance with social security and pension requirements, estate planning, exit and succession of SME business owners and self-funded retirees, who will all be looking for professional skills and advice services.
“I predict that face-to-face advice will boom for those businesses that are left, as mature age consumers will prefer not to entrust their futures and nest eggs to robo-advice or other AI generated advice platforms,” said Mr Tynan.
“Unfortunately, this much needed [face-to-face] service will be limited to the 20 per cent of Australian consumers [who] can afford it. The remaining and vast majority of consumers will have no option but to revert to robo-advice, new digital advice platforms and social media.”
With all of the incoming changes, he thinks the planning industry will struggle to attract a new generation of advice practitioners, as “the sector will be competing with other industries that have far more attractive employment and career opportunities”.
“The financial planning industry has immense brand damage and a long and complicated pathway in order to become a fully qualified [adviser],” Mr Tynan said.
In other news, the used car industry is predicting a boom in salesperson numbers for some inexplicable reason..
A stock market crash usually culls a few advisers naturally and I’ve seen a few advisers re think their career path during these events. Seems like this factor has been overlooked. Add into the mix a crash, increased client contact and the emotional impact of worrying about clients life savings and I’m sure the combination of an exam, compliance, running a business will be just too much for some.
And good riddance to the 50% that are unprepared to raise the standards of their profession. They would rather live with the status quo of clients being gouged for 2nd rate advice. The industry needs to stop pandering to these legacy groups intent on milking customers for their own benefit. I love the argument that clients will not be able to afford advice anymore, as if selling them a conflicted product on excess commissions is a better solution than no advice (it is not).
Commissions enabled a socialisation of advice. Much like bulk billing enables the poor to get medical treatment. The only difference, is high income earners subsidise medical treatment of the poor through their taxes. Whereas commissions subsidise financial advice to the poor through choice of those dealing with advisers. ie the 20% that can afford it.
With no cross-subsidisation, the bottom 80% will be left to fend for themselves without access to personalised financial advice.
[quote=Anonymous]good outcome and stuff! 50% (doggy) are going to get out or replaced by new uni graduates with the relevant degrees and let with the good ones with relevant degrees. So total 100% but with good quality remain in the industry.[/quote]
Perdon. No hablo español … or whatever language that was ?
good outcome and stuff! 50% (doggy) are going to get out or replaced by new uni graduates with the relevant degrees and let with the good ones with relevant degrees. So total 100% but with good quality remain in the industry.
Is it not the case that existing FOFA legislation, since 2013, effectively solves 99% (maybe 100%) of the FP problems being uncovered by the RC? In which case, the simplest solution is just to enforce existing law. They’ll want to remove grandfathered trails, because those receiving them don’t have to provide advice. Though the quick survey at the recent AFA day said it represented less than 15% of revenue for the majority. And if its a large % of your practice’s income and you’re not providing ongoing advice, you should be. I don’t really see the end of dealer groups myself.
Where is our precious AFA and FPA when you need them???
Yep organising another junket aka Conference.
Both are light weight political lap dogs.
Nice new work. B+
Dear Peter. That’s the way, give em a kickin. We need more groups like AOIFP. These guys are the Linchpin of the profession. The example they set is like a Beacon on the hill. If only we could get a Trio of good associations. I fully support the Academy Of Ignorance For Profit. They are the way forward.
Great article. I for one have felt so much pressure with the upcoming exam, the education requirements and all the compliance having to be managed these days. I am 50 this year and I could see myself continuing until 65-70 but I am not sure the pressure is worth it. FOFA should have been the answer and I see all this now coming through and I wonder what is next. I also find technology a challenge. So many systems that don’t do what I need them to do. I know I sound pessimistic but something is got to change for me to really want to continue in this industry.
Stressed, this is exactly my story too (except I’m 50 next year). At least we are not alone
Yep. I have an “unrelated” Post Grad Business Degree which doesn’t count. Years of experience. A great team who work with me, yet at age 51, I feel like I’m being pushed out whether I want to keep working or not. The gap in my “knowledge” will be such that it’s not just the time of studying, but re-couping the cost that makes me wonder whether this is all worth it. Early retirement is looking better by the day. By the time I hit my age pension age I will get more pension $ than I would have if I’d kept working, so the the government can help pay for my “early retirement.”
So your Business Degree and years of experience will end up with you on the Age Pension? Please leave.
Seems like you just said any University graduate aged 51 who doesn’t have enough money now to retire by the age 52 is a failure. So if your a financial planner who is not financially successful by age 52 just leave. Is that what you’re saying? Why not just call anyone on the age pension a bludger and financial flop. See how that goes down. A Financial Planner lacking empathy I think you Sir should be the one to depart.
Not at all you clown. Equally stressed 3 has 16 years before Age Pension. Surely with his education and experience he can do a little better than what he is aspiring to.
Agreed. A money manager / financial planner lacking in emotional intelligence = dangerous.
Of course all this lays at the feet of ASIC ,when the descision was made to “control “advisers thru the minimum amount of licences…they loved that the banks wanted to dominate advice,except it was never advice ,simply a product flog that’s been going on for two decades under Medcraft’s watch ..loooong before any royal commission..
Any adviser that wants to sell their buisness built up over 20/30 years ,well good luck finding a buyer that can raise finance ….and what valuation model will you use ?a multiple of EBIT? Insist on a rise and fall
Sounds like a pretty good summary.
The other factor not mentioned is that new advisers coming into the industry will need to find a remaining experienced adviser willing to burden themselves with even more compliance if they accept the role of professional year supervision. Good luck with that.
Financial planning academics may have secured themselves a nice little earner in the short term with FASEA forcing existing advisers to pay for repeat education. But the flow of new entrants into the industry is going to dry up considerably. There will be a lot of financial planning academics looking for new jobs come 2023.
You need to distinguish between Private Sector and Public Sector education. You’ve raised a very serious issue and drawback of FASEA. FASEA is a box ticking exercise to ensure advisers meet basic standards. Therefore over the next decade education providers will be delivering education at that level.
Private Sector education delivers a very specialized higher learning. Whilst University delivered education usually is focused at a basic introductory level.
There is no such thing as public sector higher education anymore. Universities are reliant on student revenue and corporate sponsorship. Academic careers rise and fall on their ability to generate money.
spoke like someone that works in education… disconnected from reality. All ok.. a piece of paper and letters after my name will solve the problems within the industry… funny isn’t it.. the next generation of planner will carry the can for past evils.. interesting that the highly educated senior execs are not required to re-sit their ethics exam!? Not cynical though.. just realistic..
I have e completed the education requirements whilst being under immense pressure to meet sales targets and preform and function for my family. I have been in the industry for 17 years and now I cannot get out…I’m over qualified in a profession I no longer want to be a part of. I’ve been unable to even obtain an interview outside of planning. I’m a compliant ethical adviser I have just had enough this time …it’s all too much the constant change and people’s perception of this industry has made me ashamed
ditto + 1
Paul, I wish the others especially the regulators and the hangers would get this!
I am already putting in place an exit strategy.
Watch this space, if grandfathered commissions are banned, and the outcomes of Royal Commission are onerous, lol that will cement this above finding.
Over Complicated ODwyer and her FASEA buffoons are just so arrogant and somehow think they have invented Financial Advice education, like nothing before existed or was worthy.
O’Dwyer has brought us an ever growing list of disasters and needs to go:
1) LIF based on the now ASIC proven tiny problem of adviser Churn.
2) Super reform, the most complicated & administratively costly changes in the past 10 years because she didn’t consult industry. The red tape and costs are mounting rapidly.
3) Corporation Act’s definition of Independent (see s.923A), being the most restrictive definition of Independent Advice possible to make her Bank owned adviser buddies look the same as the real IFA’s.
4) FASEA and it’s still confused and still unknown process for already well educated and well experienced advisers. Another Over Complicated disaster still in the making.
5) What’s next ODwyer, oh yeh Treasury & yourself are working on CIPR’s that are some of the most complex financial products that supposedly won’t need financial advice & be sold over the phone. WTF ?
ODwyer, you truly are a one women wrecking ball to Financial Advisers.
I agree with Pauls comments. Common sense is not prevailing in all of this. Over reach and finger pointing needs to turn into constructive dialogue where a reasonable outcome can be reached for all. Government needs to understand that you cannot unscramble an egg.
Too late I fear
This article is spot-on. Best of luck, customers – you lot asked for this and now have to deal with the consequences.
Exactly as ASIC, ISA and Labor want it to come to.
Wake up, we are under attack and like doleful sheep are wandering peacefully in through the abattoir doors.