One in four financial advisers expect to leave the industry within the next five years, a new study has revealed.
This finding was reported in Investment Trends’ 2022 Adviser Business Model report which looked at the needs of Australian advisers and their business.
The report also found that 37 per cent of advisers intend to switch licensees and 70 per cent of those suggested they’ll switch to a self-licensed model.
“Decreasing NPS is in part driving the increasing number of advisers across both the ‘aligned’ and ‘majority independent’ segments intention to leave their current licensee to be part of a self-licensed practice,” Investment Trends’ research director, Dougal Guild, said.
The research firm also reported that, due to key challenges such as the compliance burden, providing affordable advice and regulatory change, the total cost of providing financial advice to the typical client has increased from $2,850 in 2020 to $3,280 in 2022.
“The more successful advisers appear to have better adapted to regulatory change and new technologies to address this cost/profitability issue,” Mr Guild said.
“They primarily service wealthier clients and are prepared to pay for tech solutions to enhance their advice offering and bolster profitability.”
However, despite the regulatory burdens, Investment Trends reported that practice profitability has increased with 46 per cent of advisers saying they were more profitable this year compared to the 34 per cent in 2021.
“Overall, practices’ net profit margins are moving in the right direction,” Mr Guild added.
“Advisers are refocusing efforts on new business post the COVID and FASEA disruption. This, combined with an increasing focus on higher value clients has delivered record high levels of new inflows.”
The release of the latest study comes after Investment Trends’ 2022 Adviser Technology Needs report found that the use of multiple platforms has reached an average of three, which the research firm is saying is due to “advisers increasing the proportion of new business directed to their secondary platform at the expense of their main platform”.
However, the percentage of new inflows by advisers through platforms has dipped to 71 per cent on average (from 76 per cent in 2021), though the long-term trend remains stable with 73 per cent expected in three years’ time.
Despite the increasing use of multiple platforms, the study found that overall adviser satisfaction with platforms dropped from 72 per cent last year to 67 per cent.
Wow, so 70% of advisers intend to self-license. This should be the big talking point, not the number of advisers that are retiring.
A disgrace – what a wonderful industry that thrived on a free enterprise sprit, and a desire to serve your client, now a disintegrating and capitulating shell ruined by pathetic ill informed, self serving, ego driven public servants. Sorry to say but I think there is more industry pain yet to come!
Love it. An industry that thrived on free spirit – and the willingness to charge people for advice they never received and dress advice up as a way of funnelling people into underperforming investments…
Agree that public servants have done an appalling job, but the “industry” only has itself to blame. The unwillingness for so may vested interests to deny there was something wrong is pathetic.
I think you are referring to the larger Institutions, rather than an Industry wide broad brush. Out in non-aligned independent self-employed adviser land, our clients are our bread and butter and acting in their best interests by providing appropriate high quality advice and timely servicing is what keeps us in business. If you look at the advice practices and groups that are no longer in business, maybe that’s where your response should target.
There will only be approx 10,000 advisers left at the end of 2024….possibly even less.
This has been a Govt approved & funded, orchestrated, planned and executed cleansing programme of a specific occupational cohort.
It has been blatantly discriminatory and targeted and in most cases founded on a web of lies, misinformation, misunderstanding and ideology.
I have never seen a more determined and vitriolic attack on a single industry or profession over such an extended and drawn out time frame.
It is no wonder the attrition rate has been significant and will continue to be so.
. . . and less than 100 risk specialist advisers . . .
Was this before or after Michelle Levy’s QAR? …after reading the concessions and free rides given to Super funds, it’s pretty depressing and my business plan went from 5 years to 12 months.
I will be one of those leaving – simply because I will be retiring at age 67.
So is this being included in their estimate?
Hi Frank – about a quarter of the respondents suggesting their intention to leave in the next 5 years were aged 60 years or older – so to your question, yes many of these people, like yourself, are simply moving into retirement.
No problem, look at the pipeline of new entrant Advisers :- ) severe drought conditions.
Will Real Advisers get below 12,000 left ?
Seems highly likely
I always thought below 10k
Or another way to present the surveys results. 3 out of 4 advisers expect to stay in the industry for the long term.
That’s a high lapse rate by any standard.
While 1 in 4 may have said they will leave, I question if it will really be this many
If Jones doesn’t come through I expect it will be more…
Already 40% since 2019, why would it be any less.
Speaking for myself – passed FASEA exam first attempt, but have not actively sought FP roles since. Highly unattractive due to unstable policies.
Pretty sure we will find it is higher than only 1 in 4 advisers who will leave. At Least 3 out of 4 risk advisers to be sure.
Take all survey results with a grain of salt. Any savvy adviser who participates in industry surveys provides answers to paint the picture (i.e. send the message) they want for the intended recipients. i.e. If you want licensees to do better, you suggest you’re considering moving, even if your not, same with platforms, etc.
Lots of people say lots of things, I’d be far more interested to see statistics of what has actually transpired. Not what is supposedly going to…
Fair point
That’s what people said prior to FASEA and the RC reforms in response to various surveys indicating as many as 50% could leave. Well here we are – almost 45% gone already and that number is growing. The number of new entrants is not even coming close to the numbers needed to replace those lost through natural attrition. I would say these surveys are highly relevant and should not be dismissed
Yep