The latest data from financial planning business brokers Growth Focus suggests that leaving the industry to pursue other pursuits is now the second most common reason for a business sale in the industry, behind retirement.
The broking group said leaving the industry had replaced succession as the second-top reason for selling a business, suggesting many sellers were making a quick exit following the FASEA standards coming into force.
The data echoes recent statistics quoted in ASIC’s CP 332 paper around affordable advice access, which indicated adviser numbers had fallen 14 per cent below their long-term average since 1 January 2019, when the FASEA standards were implemented.
Growth Focus said industry exits had become increasingly common over the past 15 months among business principals looking to sell, and that such exits were more common among smaller businesses who were not able to remain in the industry without being FASEA compliant.
“Some senior managing directors have indicated to us that although they themselves are not going through the education program, they are in a position due to the size of their business to effectively manage the business without providing direct advice themselves,” the group said.
“It’s logical for small practices to leave the industry, as they are not as equipped to handle industry changes, from education standards and licensing fees to compliance requirements and insurances.”
The group said small business owners were also less likely to have properly considered succession, meaning they were more vulnerable to unforeseen issues such as illness or financial stress.
“There is very little succession in smaller practices. While succession is a common reason for sales in larger businesses, it’s simply not part of the small business mindset,” Growth Focus said.
“Illness is a key trigger for sole owners because there is no one able to take up the reins, resulting in more pressure to act decisively about a sale. The same thing applies when the single owner is under financial duress. The data also shows that succession is more prevalent in partnerships over single owners; and large businesses over small operators.”
all i can say guys is get out. Life is too short to stay in such a miserable industry. Life on the outside is so much better.
14% reductuon in adviser numbers in 18mths – wonder what FARSEAS kpi target from ASIC was.
My prediction is 10,000 advisers remaining by the end of Calendar year 2021.
It’s actually more like 25% reduction since the beginning of 2019.
If you had a person that you hated more than anyone else on earth you wouldn’t recommend they become a financial planner because it would be too cruel to them. ASIC and vertically aligned organisations have destroyed it and will come back in to pick at the carcass in a few years when nothing is left.
Realistically why would you put yourself through 3 years of study plus a professional year to pay $50k to $75k sunk costs each year and then work for an income the equivalent of a Woolworths check out operator whilst basically having unlimited liability for potential legal claims against you. This doesn’t even include that it will probably get worse if the ALP wins the election. If the answer is to “build an asset” do you really think you will be able to sell your business when there is 1 adviser left?
Not to mention the look back program where when you retire or exit, you’ll get a email out of the blue from your old licensee saying “can you provide evidence of a “service” (however service is defined at that point in the distant future) from 10 years ago…and if you can’t we’ll just payout what we think, and take you to court to get money out of you” ….. so much ASIC for moving software providers cause I’m not gain to lose my templates.
Anyone who understands risk/return trade-off would not enter the financial advice industry. That is the greatest irony.
This whole sh##show is so disheartening. A whole industry has been decimated so politicians can get a photo opportunity and a headline. That is your ultimate conflict of interest.
Legal action should be taken against FASEA, peoples lives have been destroyed because of incompetence. Its time for heads to roll. Who would want to study a masters degree and then sit a stupid exam that proves absolutely nothing. This whole thing was a charade to begin with and resulted in only big accounting firms making millions off remediation projects which I have personally worked on and investigated financial planners. Additionally if you were previously an adviser before 2017 you are considered a new entrant regardless of qualifications and experience, who in their right mind decided to make up these rules? The stupid exam will not stop anyone making unethical decisions, this whole thing is a complete farce should be completely redesigned.