According to Adviser Ratings’ 2023 Australian Financial Advice Landscape report, which provides a snapshot of the wealth management industry, adviser numbers are stabilising for the first time in five years.
For the roughly 15,800 advisers that have stayed in the profession, Adviser Ratings said that many have reported increases in revenue and profitability in the past 12 months.
Adviser Ratings chief executive Angus Woods said the industry has turned a corner.
“Advisers who have invested in their business and profession are starting to reap the rewards, with high client demand, profitability, and a greater menu of tools to help them succeed,” Mr Woods said.
“Australians also recognise advisers play a critical role in planning for the future and managing shorter term financial pressures, particularly at a time of interest rate rises, market gyrations and inflation.”
The research also found that the perception of advice is changing, with almost one in five Australians willing to pay up to $5,000 to see an adviser. This represents the largest increase, with the number of Australians willing to spend between $2,500 and $5,000 jumping from just 4 per cent in 2021 to 19 per cent in 2022.
This is reflected in the median cost of advice rising 5 per cent to $3,710, while what Adviser Ratings termed “supply challenges” meant fewer than 10 per cent of Australians are receiving retail financial advice.
In addition, almost 80 per cent of Australians said they could not afford that median cost of advice.
“As Australians face extreme cost of living pressure, the demand for professional advice is set to grow even further,” Mr Woods said.
“Advisers are responding by adding to their client load and making material changes to their businesses to improve efficiency.”
In terms of investment allocation, Adviser Ratings found that difficult conditions have led to advisers seeking an “eclectic mix of investment vehicles”. More than a quarter (27 per cent) of advisers plan to increase their use of active funds, while passive funds like ETFs continue to make up a large part of advisers’ recommendations.
The research also found that despite a tough 2022 for ESG, more than a third (37 per cent) of advisers are looking to increase their allocations to ESG-conscious vehicles.
On the flip side, Adviser Ratings said that LICs and other listed investments will continue to be utilised by a small minority of advisers.
The 2023 Australian Financial Advice Landscape report is based on responses from 1,388 financial advisers and practice owners.
In March, Adviser Ratings released the results of a survey that found advisers embraced tools for advice production, workflow management, and annual agreements in 2022.
