Estimates of Top 100 planner ownership have wide and incorrect variations
Wide variations in the number of financial planners reported to be operating in the industry has been a feature of the sector for some years but, as Jason Spits writes, as the planning sector has grown and changed many estimates have turned out to be wrong.
At the recent Senate Committee hearings into the performance of Australian Securities and Investments Commission (ASIC), the chair of the industry regulator, Greg Medcraft, was asked how many financial planners were operating in the Australian financial services industry.
In a response which surprised the senators on the committee Medcraft stated that exact figures were not available and that while ASIC was aware of approximate numbers it could not give a definitive number. He stated this was because ASIC was not supplied with the numbers of salaried planners within institutions and only recorded those who were licensed directly through ASIC.
The senators’ question was not a new one and has been asked by various parties over the years, including Money Management which first asked the industry to count itself back in 1999 when it carried out the inaugural Top 100 Dealer Group Survey.
Back then the Top 100 had nearly 11,000 planners and grew at a solid pace of about 590 planners every year until 2011 when numbers peaked at 17,245 before beginning a four year pattern of rolling declines of about 350 financial planners per year. The steep decline between 2013 and 2014 is explained by Money Management separating about 900 non-advice giving authorised representatives from this year’s data (See About the Top 100, page 14).
The single largest increase of planners in the Top 100 - 1789 - occurred in 2000, the same year that both the Commonwealth Bank and National Australia Bank made significant inroads into the financial planning arena by purchasing funds management and advice groups (Table 1). 
The presence of the banks in the financial planning arena is frequently posited as being a negative development. Yet this view tends to forget that institutional alignment of financial planning groups existed prior to the banks ramping up their involvement with planners also working for advisory groups owned by funds management and insurance companies.
What has changed in the course of the past 15 years was that banks also became owners of those funds management and insurance groups increasing their adviser numbers and leading to greater levels of vertical integration and concerns about the close knit relationship between product and advice.
This concern has developed to such an extent that a well-worn mantra in mainstream media has been that 80 per cent of financial planning groups are 'owned’ by the 'big four banks’ and AMP. This view of planner numbers does not help those who do not have any institutional connections - and it appears to be wrong.
This year’s Top 100 survey shows that AMP and the banks have just under 60 per cent of financial planners operating under one of their Australian Financial Services licenses and that collectively institutions have 72 per cent of the sector’s planners licensed through them (Table 2). 
These percentages are likely to be even lower, if not by much, as the Top 100 picks up all of the institutionally held planning groups and most of the large and mid-tier non-aligned groups. The groups that do not often make the table are the many hundreds of one, two or three person planning groups around the country which hold their own license and operate their own 'independent’ businesses.
These planners are often represented by a number of dealer services models with estimates putting the amount of planners accessing these services as between 500 and 600, many of them not represented in the Top 100 in any way.
While this does not negate the sizeable place AMP and the 'big four banks’ as well as other institutions hold within the planning sector it does raise questions as to why the non-aligned planning space seems to have less industry presence than the Top 100 numbers would indicate.
The survey would appear to answer that question as well.
To find 100 planning groups that meet the appropriate criteria requires examining around 120 planning groups and practices. Of those groups which fell outside the Top 100 this year there were only 37 planners between 17 planning groups - roughly two per practice indicating that in many cases the small end of town is indeed very small.
As to finding an exact number of financial planners, Senate Committees and ASIC may have to wait for two further developments - the enshrinement of 'financial planner’ as a working definition in law and the establishment of a register of all planners, salaried or otherwise, by the Government.
These two steps alone are unlikely to change the make-up of the planning sector but they will provide end consumers with a better understanding of who is providing financial advice.
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