About 50 per cent of financial advisers currently in the industry will choose to exit in the wake of new education requirements, the royal commission, and over-regulation, according to a business broker.
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.
Several firms have been impacted by the corporate regulator’s action.
Super funds must now have a retirement income strategy in place.
Vanguard has called for a complete overhaul of the advice industry.
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