The advice industry continues to shrink, with the number of actual advisers now down to 19,030, as escalating costs and regulatory burdens continue to fuel a mass exodus from the industry, data issued by Wealth Data on Thursday revealed.
According to the data, the three largest advice groups — AMP, IOOF and NTAA — accounted for 52 per cent of adviser net losses since the start of this year.
Namely, the total number of advisers since the start of 2021 shrunk by 1,649, while outflows from the three groups totalled 861.
Looking at the groups individually, IOOF lost 401 advisers, AMP Group, 279, and NTAA, 181 members.
At present, AMP, IOOF and NTAA represent 3,375 adviser roles, or 17.5 per cent of all current adviser roles. Conversely, at the start of the year, they accounted for 4,236 roles or 20 per cent of the 20,968 total.
This puts their net decline as a group at 20.33 per cent, while the sector as a whole, minus the three groups, declined from 16,732 to 15,944 or 4.71 per cent.
Earlier this year, Adviser Ratings predicted only 13,000 advisers would be left in the industry at the end of 2023. If the decline persists, it is feared the industry will be reduced to under 10,000 advisers by 2026.
Overall I am not surprised. The quality of financial advisors in Australia is mediocre at best. Some exceptions granted, but the one’s I have dealt with only focus on revenue and couldn’t care less about the client base. Some advisers sell fairy dust to clients and charge anywhere between $5000 and$10000
Financial advisors need to go back to basics and the industry needs to reset itself. Otherwise, it will be too complicated and expensive and people will not go to a adviser
If only business were more inclined to complete PY’s to allow new Advisers to take the place of the ones who leave… As a Paraplanner who is doing everything in my power to become an Adviser, I have had NO luck with obtaining a PY. It really is a shame, it should not be this hard to convince businesses to put people through the PY. Before they all realise it will be too late and they will have no choice but to turn away new business, as they will not have the capacity to service the clients themselves (compliantly, anyway…).
You’re not wrong, this is a big issue. I wish you the best of luck!
Sadly the commercial reality of doing so for most businesses is just not there at present, due to the onus on the already extremely busy advisers (Time taken to do the correct PY training is time away from client work). When one considers most younger employees move on every few years, most adviser businesses I talk to at present, don’t see the benefit in training someone up, for the benefit of another firm and would prefer to spend the no-commercial time on getting their compliance requirements up to scratch.
Hold in there though. As the pace of change and adviser distractions come to an end (such as having to do exams and study), you’ll notice a recruitment spree as advisers free up time to focus on growing their businesses once again.
In the meantime, paraplanning is in huge demand, so make your money there and enjoy the experience you are getting which will be invaluable as an adviser.
I personally have raised this as an issue since before the regulations changed on 1 January 2019. And unfortunately, I don’t see too many businesses picking up the pieces for a while yet.
AMP used to run academies, big banks had graduate programs… none of these businesses are in a position to run PY on a large scale though as their adviser numbers are dwindling and they don’t have the vacant positions to fill at the end of a program.
Add to this, many businesses targeted those programs to take graduates away from businesses that had spent big money to train/ develop.
The sad reality is there is nothing in it for large businesses who have the resources to deliver on PY programs and small businesses don’t have the resources available to support properly – if you go by the book, PY is extremely time consuming and takes away 50% FTE in a support function for the PY participant.
Good luck! It will eventually turn, but there is a long road ahead.
It’s not just a question of resources. There is also lots of regulatory risk in being a PY supervisor. Unfortunately most advisers are already overwhelmed with regulatory risk. Very little of this regulation has anything to do with protecting consumers. Most of it is mindless bureaucracy designed to wreak revenge on the current generation of licensed advisers, for the transgressions of a minority in the past.
Failure to secure a PY place might actually be a blessing in disguise for aspiring advisers, if it forces them to change tack on their career and not join a profession that has become a target for indiscriminate regulatory persecution.
Yes, keep watching!!