According to the Adviser Ratings Musical Chairs report, there was a small increase in adviser numbers for the first quarter of 2023, moving from 15,833 to 15,857. While a net increase of 24 advisers was not a large figure, it reversed an exceptionally negative trend that began in 2018.
“After several years of upheaval, there are early signs the 2023 calendar year may bring renewal for financial advisers,” the report said.
The first quarter of 2023 also saw 491 advisers switch licensees, up slightly from the 451 advisers that migrated in Q4 2022.
“Traditionally, we’ve seen a rise in switching in the first quarter, as advisers settle into the new year and mark out their business and growth intentions for the next 12 months,” Adviser Ratings said.
“We expect activity to pick up in the next two quarters, which are typically the busiest of the year for licensee switches.”
The adviser exodus has also slowed significantly, with just 212 advisers deciding to leave the industry this quarter. This is less than half of the departures in the corresponding period last year and roughly 35 per cent fewer than last quarter.
“We expect a continuation of relatively low number of ceased advisers given the waiting on the Quality of Advice Review and the experience pathway draft bill in consultation phase,” the agency added.
The drop in adviser departures has led to a much smaller gap between entering and exiting advisers. Namely, Q1 2023 saw 90 new advisers join the profession, meaning there was almost one new entrant for every two exits.
“To put that into context, just two years ago, there was one arrival for every 30 exits,” the report said.
On the licensee front, there was a slight dip in the number of diversified licensee advisers, with gains in the boutique, privately-owned market segment, however, the landscape saw minimal change overall.
Over the past year, limited licensees and banks lost 47 per cent and 26 per cent of their advisers, respectively. Small, privately-owned practices were the only sector to see an increase in numbers across the previous 12 months.
New licensee registrations are on the same pace as licensee discontinuations, Adviser Ratings said, adding that this is “consistent with the other trends we’ve seen with adviser numbers”.
“There were only a handful of new licensees registered across the quarter, most of which had between two and five advisers on the books,” the report said.
“With the banks now virtually eliminated from the advice space, new licensee registrations are coming primarily from the privately licensed space; however, close to one-in-three set ups are from the advisers who were previously under a diversified licensee.”
Still a large annual drop in the hundreds