Adviser numbers holding back public and private market participation: SIAA

In its submission to ASIC’s February discussion paper on private markets, the Stockbrokers and Investment Advisers Association (SIAA) highlighted that a key factor affecting the appeal and accessibility of both public and private markets is the limited number of financial advisers in Australia.

Highlighting the decline in the number of advisers – which fell from 27,959 in 2019 to 15,611 as of 24 April 2025 – SIAA said “advisers are a vital part of the distribution network and a healthy financial services ecosystem, linking investors with both public and private market investments”.

“The fall in adviser numbers has been primarily caused by a failed approach by government to the education pathway into the profession of financial adviser,” SIAA said.

“The government has pledged to address this failure by creating a more flexible pathway for new entrants to the profession that will hopefully significantly increase adviser numbers. We are hopeful that once this reform has been implemented the number of financial advisers will grow substantially.

“However, this process will take some time as well as legislative change. In the meantime, a lack of adviser numbers will continue to impact investor participation in both public and private markets.”

The organisation also flagged the dangers inherent in retail investors accessing private markets but argued that adequate protections do exist.

Namely, ASIC’s paper said the illiquidity of private market investment is a key risk for retail investors as well as misaligned incentives and conflicts of interest on the part of managers of retail private capital funds. They may be subject to inflated fees or expenses or misleading information on performance or inappropriate valuations that benefit people other than investors or members.

“Retail investors can face significant harm if persons operating businesses that on-lend retail investment monies fail to comply with the law, as evidenced by issues that have arisen in the past in relation to debentures and managed funds,” the regulator said.

However, SIAA noted that lowering minimum investment amounts for private market investments to $50,000 is a positive step towards boosting retail participation.

“This is beneficial for retail investor participation in private markets as it reduces the concentration risk that occurs if private market investments require large minimum investment amounts. It also assists these investors to diversify their portfolios,” it said.

“Whereas 20 years ago investors may not have had the interest or sophistication to invest outside of Australian-listed securities, now larger numbers of them are wanting exposure to more diversified assets and different asset classes than previously. High-net-worth investors expect exposure to different asset classes to build a diversified asset portfolio.

“Our members do not consider that this is detrimental or necessarily increases investment risks.”

However, in the case of those funds that have dropped their limits significantly to as little as $2,000, SIAA said this presents risks as it could attract investors who lack the requisite understanding of the asset.

“This attracts larger numbers of retail participation and can increase risks if those investors do not have an understanding of the underlying asset,” it said.

Nevertheless, the organisation felt current financial services laws provide sufficient protections for retail investors in the event of any problems. This includes the Australian Financial Complaints Authority and Compensation Scheme of Last Resort.

“Retail investors are subject to a significant array of protections under current financial services laws that provides them with sufficient protection when investing in private assets,” it said in the submission.