The debate around adviser numbers and whether they are adequate has picked up over recent years, driven partly by a recent rebound which was preceded by a fairly significant downturn.
But, according to the chief executive of Verse Wealth, Corey Wastle, it’s time for the industry to direct its attention elsewhere.
“I’m not sold that we actually need more financial advisers,” Mr Wastle told ifa recently.
“Going forward, I think part of how we meet that demand [for advice] is by continuing or beginning the process of deregulating advice.”
Once the deregulation is completed, he suggested that advisers can proceed to build businesses that better harness technology and artificial intelligence (AI).
“All those things will enable us to, with the same amount of resources, serve more clients,” said Mr Wastle.
“I see a future in 10 years’ time, with the same level of staff, a firm could look after twice as many clients as they do now by harnessing technology, leveraging artificial intelligence, and integrating technology into their client experience,” Mr Wastle continued.
“Advice has been a complex thing to deliver. It’s been done with cumbersome technology and a lack of technology.”
He projected that, over the next decade, opportunity will abound for those looking to “do more with less”.
“There’s a lot we could be doing that we aren’t yet doing as a collective to deliver more advice faster, better, and cheaper,” Mr Wastle said.
“We don’t have complete control over what regulations are applied or the educational pathways, but we can control how businesses are built, how processes are run, how technology is utilised, all those types of things, to serve more people with the same amount of resources.
“I have no doubt that the advice firms that win over the next decade will be those that do exactly that,” he said.
Mr Wastle believes that businesses that fail to harness technology and AI, quite simply, “won’t be around”.
“Those that they’ll be competing with will be worldly, more efficient, and will deliver a much better experience at a lower price point to more people.”
Namely, using Super Consumers Australia research, AIOFP suggested that only 25 per cent of Australian adults look to the expertise of professionals (e.g. advisers) to assist with retirement planning.
The research, which covered 45 to 80-year-olds, found that while one in four Aussies plan to consult an adviser, as many as a third (37 per cent) are looking to take a DIY approach to plan for retirement, while 38 per cent are disengaged with few assets.
This, according to AIOFP’s Peter Johnston, suggests that if we assume that 25 per cent of Australia’s adult population plans to seek advice at some point or another, we come to a group of some 4.5 million people – a group, he believes, is easily serviceable by our existing advisers.
“Divide that by 15,000 advisers and you have exactly 300 clients per adviser. Advisers can have up to 500 clients and risk-only advisers can have up to 700,” Mr Johnston said.
This is all fine and dandy for what the article insists on calling “advisers”, generically, hoiwever when you start to define those advisers (which the typical publication rarely does) you realise that what’s being said here doesn’t and can’t apply to risk specialist advisers.
Only the AIOFP usually bothers to define and speak on behalf of specialist risk advisers. Before we even get to how many clients a risk adviser can handle we should pause and think how many are left. No definitive number – wow, I wonder why nobody has cared enough to gather stats like that – riskies and their plight being marginalized yet again. Riskies are important because your average “adviser” (or financial planner/investment adviser) doesn’t want to do or know about writing insurance. Some see it as beneath them others don’t see the payoff as worth it and others simply don’t understand it and proper implementation adequately.
Alas, riskie numbers will continue to decline until there are none. This is a foregone conclusion as there are zero incentives to be one for newbies and most experienced ones have sold up and retired in disgust. Why wouldn’t they? The 60% upfront commission is an insult to an decades experienced specialist risk adviser and in no way worth the time, stress, compliance risk or claw-back risk that is currently applicable. I am gobsmacked the life companies don’t see the writing on the wall for themselves. If they do then they’re either stunned and don’t know what to do or they’re still so arrogant that it will be their complete demise by 2027.
Interesting article and some very good points.
The problem with the “numbers of advisers discussion” is that it has been mostly driven by self appointed gurus, which are usually opinionated AFSL heads.
Their business runs by numbers which if you have more advisers they will write more business and they will make more money and profit.
Call it a hangover from past times which is how some AFSLs exist.
Take away some of the levels of compliance and bureaucracy (which may include AFSLs) and advice should be a lot easier to give.
This of course brings back the question that do AFSLs have a purpose going forward?
There’s only so many clients you can service until you don’t really have a relationship with them anymore.
How many AIs will pay ASIC financial adviser, Industry Funding Levy which was earning Treasury 1.6 times ASIC’s enforcement costs (quote Hon Stuart Roberts) ?
I agree Corey. Even 25% is an optimistic target considering just 10% currently use an adviser. As AI makes it easier for advisers to service more clients, the need for more advisers will drop.
Very good points! I also do not see the need for more quasi advisers to be imbedded in to Super funds. The real culprits are ASIC and their compliance crusade, which stifles every part of the the advice process and impedes the general public from receiving advice, and then you have the licensees whom implement their own (interpreted) compliance obligations on advisers too, not to mention AFCA and their processes & biases.
Deregulate so that compliance can be more reasonable and efficient (this includes individual registration and doing away with AFSL registrations), allow advisers to use fit for purpose software solutions to provide service and fulfil what the actual public are looking for with advice. The days of needing 80 page SOA’s and big fees for simple advice should be gone. Allowing software/hybrid advice solutions, with the support of an adviser, would actually provide greater incite of the advice being provided by advisers too. I would say most consumers have fairly simple advice needs and wish to be guided by a qualified adviser in a cost effective manner (Like a GP) and then for more complex advice, higher fees are charged for that advice, and/or the use of specialists via referral.
Lastly, if the government are so adamant we need more advisers, why not build the pool of qualified & educated advisers, whom can operate independently from the big super funds. As the article stipulates, freeing up advisers to provide more advice is the better solution.
We can easily quadruple the amount of clients we provide service support if we revert back to the old Customer Advice Record (which itemises the specific advice & the fees only) and we eliminate the Annual Fee Renewal Consent Forms, ridiculous red tape that doesn’t exist in any other nation on earth. It’s that simple.