Following the loss of thousands of advisers from the industry in 2019, dealer group Synchron has predicted that numbers will worsen in the coming year, suggesting the government may need to halt the pace of regulatory reform following the royal commission in order to stem the public spending impact of further decline in the industry.
Addressing a media conference in Sydney on Tuesday, Synchron executive director Don Trapnell said the licensee had lost approximately 10 per cent of its adviser force in 2019 primarily due to the demands of the new FASEA standards, and expected closer to a 20 per cent decline in 2020.
“At the start of last year, John [Prossor] and I assessed that about 10 per cent of Synchron advisers would not make the journey with us by the end of 2019 and we were spot on – about 50 reps moved on, most of them leaving the industry because of the exam requirements,” Mr Trapnell said.
“Our state managers have a strong emphasis on recruiting so we had a net 30 [adviser] increase [in 2019], but when you add that to the 50 that have gone out, we had to put on 80 people to get to that number.
“I would suggest the next 12 months is going to be harder – if you asked me whether a 20 per cent loss is reasonable, I think that’s probably very close to the number of advisers leaving.”
Mr Trapnell said those electing to leave the industry were primarily older risk-focused advisers, which was likely to be exacerbating Australia’s underinsurance problem, with Synchron sales figures reflecting a significant drop in the numbers of clients taking up life insurance.
“The guys who specialise in life insurance are the ones that are struggling to handle the FASEA requirements and the additional compliance requirements that are happening in our industry. As a result of that, turnovers in life insurance companies are down and new business is down dramatically,” he said.
“We are the second-largest writer of risk new business in Australia and we had a $500,000 reduction in new business in the last 12 months, and other licensees have lost a lot more than that, which means consumer protection is down, which means long term our social security bill will be up.”
The comments come following a recent Adviser Ratings report, which estimated over 4,300 advisers had left the industry in 2019, bringing numbers to their lowest level since 2015.
Given these dramatic declines, Mr Trapnell said the government should look to hold off on any further actions that could inadvertently push more advisers out of the industry given the possible impact on public spending, including the full phase-out of life commissions that had been floated as a possibility following the royal commission final report.
“I don’t think there’s any hidden agenda within government to decimate our industry – I think the government is trying their hardest to improve our industry and improve the public perception of the industry,” he said.
“But as you see the numbers going down of advisers, those numbers can’t keep going down because eventually consumers are going to start suffering and our social security bill will get hammered. It won’t be now, it’ll be in 10 to 15 years’ time and I don’t think this government has an attitude of ‘I’ll let a future government worry about that’.”
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