Addressing the AIOFP conference in Hobart yesterday, Forte Asset Solutions managing director Steve Prendeville said the years since the royal commission had been “the most disruptive we’ve ever seen” in terms of regulatory change and the exit of the previously dominant major institutions from advice.
“There have been seismic shifts as the banks went out, we had the Hayne report, but what happened through all this period of time is we went through this period of suspense where no one could really do anything [with their business],” Mr Prendeville said.
He added that over 4,000 advisers had left the industry in 2019, and more than 3,500 in 2020, for a total of 7,738 over the past two years.
Since January 2019, the number of advisers in the industry had shrunken 26 per cent, Mr Prendeville said.
“But this cohort was predominantly salaried bank advisers, accountants who couldn’t operate without exemptions, or it was the small end of businesses, sub-$200,000, maybe up to $400,000, that had significant amounts of grandfathered revenue and were unable to convert that,” he said.
“That leaves our industry at the moment with around 20,715 advisers. [The exodus] has slowed down in the last two quarters, but we expect that to elevate in the final two quarters of 2021 with the FASEA exam. There are only two sittings now and we have 48 per cent of our community who have not gone through that.”
At the same time as sub-scale practices or salaried advisers looked for the exits, those remaining in the industry moved increasingly to non-aligned dealer groups as institutional advice groups slimmed down or wound up.
Mr Prendeville said more than 6,100 advisers had switched licensees in the past two years, and that the shift to independence had led to better quality businesses among those that were remaining in the industry.
“We had adviser migrations coming out of the institutions and going to the independents. We’ve seen the iceberg of the institutions, which dominated 70 per cent of distribution, completely revert, so now we have 70 per cent independence,” he said.
There is a tragedy coming. There are great advisers who have left the industry and great advisers staying.
However the practices that are trying to do the right thing and service clients are already screaming out for advisers and there are none available. NONE AVAILABLE. This is going to cause more advisers to leave the industry as they burn out and can’t keep up with their workload. Letting clients down hurts advisers who want to help people. What are government going to do about the future lack of advice.
Anybody entering the advice industry under the status quo does not understand risk/return. Therefore they should not be an adviser in any event.
At what point does the industry say “we are better of taking all this capital and doing something else”?
CBA, Westpac, NAB & ANZ have already done it. They were even willing to pay millions in fake “remediation” as a quick exit fee.
The result of the damage to our industry is because of the bias of the Hayne Royal Commission and its kangaroo court methods. Forget the Labor Party, but the Liberals managed to create a lot of damage by proceeding with all the recommendations. Kelly O’Dwyer was not the only culprit. Banning commissions that are considered conflicts of interest was uncalled for. There are also those in the industry who eat their own and a careless with what they blog. Scot Pape (Bear Foot Investor) inferred that he was a financial planner. He’s now promoting himself as a financial councilor. Wasn’t who recommended industry super and several LICs? In fact the whole episode of the Hayne Royal Commission was divisive and what about the weak responses by the highly paid key executive who were hauled before and humiliated by junior barristers. The only person with credibility was Chris Kellaher who really had nothing to answer for and fell on his sword because he had had enough of stupid inept people.
There will be more fall out in years to come.
Lets also be realistic that there were a lot of support staff like CSA, CSO etc added to the register before the end Dec 18 (I think) to avoid the whole professional year. I know of many who did this at their employer request/future career optiosn, who now have dropped off as well. These were never advisers in the true sense.
Industry GENOCIDE – unconstitutional approach,and bias ?
Again – I want to know the suicide rates to date and or potential suicidal rates to our industry peers as a result of this homicidal approach to this socialistic cleansing
Well done the Liberal Party – party for free markets – BS.
Would have we been better off with the Labour Party? Kelly O’Dwyer and now MIA Jane…….. LNP has screwed us all!
The only way the LNP would have stood up for us is if they were in opposition and were trying to oppose what the Labour party was doing to us. How ironic, politicians are all a pack of morons.
What has not been mentioned in this article is the average age of an adviser and the lack of new advisers entering the industry.
The writing well and truly appears to be on the wall for life-risk specialists. What a sad journey and a eulogy for a once-great buiness opporunity we enjoyed pre-LIF, FOFA and FASEA. Just as importantly, what about the plight of our soon-to-be orphaned clients?
Extremely pertinent questions Paul, I’m asking myself these things right now. We, the good riskies, did indeed have it good so there’s that to remember at least. Doesn’t help now though – I’m leaving end of year at age 60 well before planned time. I have not even started to find a buyer yet. It will be a very sad time for me but I can honestly say I can’t wait until I’m clear of all this idiocy from what was once our cherished industry. Can’t say we know each other Paul but I know well of you. Good luck and fortune to you. Cheers.
Well I’m not even sure the whole personal life insurance industry is going to remain viable under the current regime. Look at the money and inflows drying up in the last couple of years, the insane premium hikes and the restriction on IP policies. What they have managed to do is transfer this risk back onto every day Australians and the government.
The worst thing of all…. it was stated what would happen by many in the industry when these changes were proposed but people with their own agenda’s that benefit no one but themselves managed to push their agenda’s forward. But for some reason the focus was on trying to stop advisers being paid for their work.
only 2 FASEA sittings left and only 48% gone through. Even FASEA would be unable to put a positive spin on that though I’m sure they will try.
It will be absolutely fascinating to see if and what concessions come from FARCE-IA when it is obviouys they have culled HALF the entire industry with their ill-conceived, poorly executed and conflicted ‘exam’ that presupposes that someone can actually be ‘tested’ on ethics. Just absurd AND immoral considering the other significant challenges facing advisers and unnecessarily wasting their time currently. These creatures that call themselves governing politicians should be hog-tied and forced to comply with their own rules and sit exams to prove THEY are relevant and educated to run the country. [b]Why is this not enforced??! [/b]Commhttps://www.ifa.com.au/media/com_comment/ubb/ubb_italicize.gifon sense to me!
I don’t think FASEA was ever interested in positive spin. It was their job to worry if 1% or 99% of advisers sat the exam.
A remarkable achievement by Kelly O’Dwyer and the LNP
LNP, O’Dwyer, Frydenberg, ASIC and FARSEA have truely Strangled the Advice industry.
Must be so proud to be a Canberra bubble bureaucratic moron.
Hope that Mythical Robo Advice kicks in soon to Advise 95% of mums and dads that need it and can’t get access to Real Advice.
20715 x 48% = 9943
Jan 2022 numbers will be interesting.
Industry decimated
Great work by the Government helping small business
I have always said 10,000 will remain.
Woo careful Steve using that word “independent”