Adviser Ratings’ Musical Chairs Report for the second quarter of 2020 revealed that 1,198 advisers left the industry in the three months to June, with most of the exodus coming from privately owned licensees.
The institutionally owned advice sector lost 361 advisers over the quarter, while 901 advisers left privately owned dealer groups during the same time period, the report said.
Within the privately owned sector, the only type of licensee to see positive growth in the quarter were those with two to five advisers, with a gain of 1 per cent.
The number of advisers exiting the industry rose significantly to 24 per cent annualised over the quarter compared with 16 per cent over the past five quarters, while those switching licensees stayed at 12 per cent, which was the average for the past year.
However, the report noted that the higher exit numbers could be due to advisers either deregistering temporarily due to licensee mergers, such as that of First State Super and Vic Super, and a number of groups switching to a wholesale licence during the period.
Just 12 new advisers joined the industry during the quarter, the report said.
Adviser Ratings also flagged ‘client orphaning’ as a significant issue given the dynamics occurring in the industry, with $79 billion in funds under advice in transition from ceased advisers over the second quarter, a higher amount than any of the previous five quarters.
The group noted that as well as advisers leaving the industry, many were streamlining their client books and giving up less profitable clients as the cost of advice continued to rise.
In total, around $127 billion in client funds were in transition over the first half of the year, the report said.
Those licensees with large numbers of advisers joining over the quarter included Avana Financial Solutions, which saw 28 new additions; Sequoia Wealth Management, whose takeover of Yellow Brick Road’s wealth business saw it gain 20 new advisers; and Lifespan Financial Planning with 15 new additions.
At the other end of the scale, ANZ saw the most adviser losses as representatives transitioned to IOOF, while MyPlanner Professional Services saw the second highest losses following ASIC’s cancellation of its licence.
IFA you’ve got a bit of a problem. Through no fault of your own, your readersip is in decline…
The AFSL’s get to keep the clients and the revenue. They are smiling.
Bet you a slab of beer that many clients files won’t be compliant either.
Thoughts and prayers to the 12 new entrants.
Good job ASIC, quality KPI how many more orphan clients and unadvised $billions can you cause.
Corrupt ASIC on cahoots with Industry Super, Labor & the Unions, their master plan is finally paying off. Smallest glimmer of hope is the Braggs/Wilson/Hume /Falinski group who are daring to challenge the unholy status quo.
I predicted this back in the advent of FOFA, and with a weak ineffectual FPA & to a lessor degree AFA bowing and grovelling to the then Labor Gov and a clearly destructive regulator, we stood no chance – especially when we’re divided and have so many ‘holier than thou’ types in our ranks that supported Rantall at the time.
I’m still going strong and my business is directly benefiting from these exits as we saw the writing on the wall and made appropriate changes (ditching insurance was one of the best measures!), so suppose this is really just a “Haha, told you so, eff you” message to all the lazy slobs or preachy w*nks who wouldn’t push back against the Gov or the d*ckheads at FPA and kept saying in these comments that it was a loony conspiracy theory. Like a Toyota ad, funny how I now am the one ‘Still smiling’.
Yeah, good luck. Just wait til ASIC target the SMAs and MDAs that have sprouted like mushrooms. Hope you’re still smiling then. I could be wrong of course, but with this regulator you can’t rule that out.