Steady decline of planners continues

Money Management's TOP 100 Financial Planning Groups survey has found financial planner numbers have dropped against the backdrop of increased educational requirements and changing business models, Oksana Patron writes.

After yet another turbulent year, with a landscape dominated by ongoing discussions around future dealer group business models, it appears the Australian financial planning sector saw a slight drop in the overall planner numbers since last year, according to Money Management’s TOP 100 Financial Planning Groups Survey.

The past 12 months also saw planner movements between companies which shrunk the majority of aligned groups considerably.

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The market also saw a growing interest from dealer groups into a new commercial model. For example, Paul Barrett’s AZ Next Generation Advisory’s model is based on developing a significant presence by offering financial planning groups the capital they need to grow, with the strategic payback being equity, alignment, or even ownership.

On top of that, recent months saw a growing number of experienced advisers deciding to put their financial planning careers on hold due to the industry push towards higher educational standards.

These exits were emphasised by the higher educational and professional requirements imposed on both new ane existing planners by dealer groups.

This year’s TOP 100 survey saw the number of planners hired this year drop by around two per cent to 14,701 planners. Although planner numbers in the TOP 100 had briefly increased in 2015 to 15,274 from 15,069 in 2014, the survey this year again confirmed a steady decline in the planner numbers over the years, particularly when compared to the levels registered in 2012 and 2013 when numbers exceeded 16,000.

Of all the dealer groups that made this year’s TOP 100 ranking, less than 40 per cent reported an increase in the number of financial planners they currently had on board.

Interestingly, the aligned groups, owned by major institutional players, were significantly under-represented in this set, and made up only 15 per cent of those reporting a growth of financial planner numbers.

At the same time, dealer groups owned by either the Big Four or AMP, saw a significant decrease in the number of planners and saw a departure of more than 600 people altogether.

The survey also found that AMP led the pack in terms of the biggest decrease in financial planner numbers, as the four dealer groups that are owned by the company jointly shed more than 250 advisers (8.3 per cent) since last year’s survey. 

Despite AMP Financial Planning experiencing the biggest departure of planners (120), it still managed to retain its top position, for the third year in a row, in the overall Money Management TOP 100 Financial Planning Groups ranking. 

It was followed by another AMP-owned group, Charter Financial Planning, which also managed to retain its second spot for the third time in a row, despite a drop of 91 planners this year. This represented more than 10 per cent of the company’s total headcount.

Another big player that experienced one of the highest outflows of planners was NAB. The bank’s financial planning groups saw a 12.3 per cent decrease of planners with Garvan Financial heavily hit as the company shed 38 planners, a 7.9 per cent drop year-on-year. This result pushed the firm’s ranking down one notch.

Additionally, NAB’s largest financial planning group, NAB FP also saw a significant drop in financial planner numbers. According to the Australian Securities and Investments Commission’s (ASIC’s) Financial Advisers Register (FAR), in September, the firm had on board 16 per cent less financial planners than last year. 

By the end of 2016, NAB FP announced that it would reduce the number of its entry-level financial adviser roles from 90 to 35, in a move aimed to realign its business and enhance support for its financial advice practitioners from their leaders. According to NAB FP, the changes which were scheduled to come into effect in February this year were expected to impact around 55 entry-level positions but at the same time the firm ensured it would create 30 new roles and there would also be opportunities for those affected by these changeswithin the wider NAB Group.

ANZ Banking Group was no different as it experienced a significant decrease of close to nine per cent, across four out of five dealer groups operating under its umbrella. 

Additionally, the bank recently decided to cool off the speculation around the possible sale of its life insurance, superannuation, investment, and advice business, after it had announced such plans to the market earlier this year. The bank confirmed in September that iremained in discussions with “a number of parties” for possible divestment of its wealth business.

According to this year’s survey, ANZ dealer groups Millennium3 Financial Services and ANZ Financial Planning continued to see reduced numbers in planners, with a decline of around eight and 12 per cent, respectively. 

What is more, the remaining two ANZ-owned groups, RI Advice Group and Financial Services Partners, that reported a growth in their planner base by 6.6 per cent and 7.4 per cent respectively last year, reduced their numbers by more than seven per cent each.

The survey also found that the only ANZ financial planning group which saw a steady number of financial planners was Elders Financial Planning. It retained the same number of planners as last year.

Furthermore, Commonwealth Financial Planning, which shed 42 advisers last year and saw 59 leave the company two years ago, continued to reduce its headcount with another 66 advisers departing the firm this year. 

However, Commonwealth Financial Planning managed to maintain its position unchanged from last year and once again secured third spot in the overall ranking, Another Commonwealth Bank (CBA)-owned financial planning group, Financial Wisdom saw the number of its advisers continuing to shrink, with a further 5.4 per cent decrease this year, and moved down its position from ninth to 10th.

IOOF was another big player which announced in February plans to reshape its business through selective divestments and acquisitions, and a stronger focus on its core wealth management business after a 17 per cent decline in underlying net profit.

In August the company reported strong advice-led results, helped by an increase in net inflows to $4.6 billion over the period and an additional $976 million from 33 new advisers. 

According to the findings of the TOP 100 survey, IOOF’s Consultum Financial Advisers added 50 new advisers this year, increasing the total number by 36 per cent to 190 planners, which was one of the biggest single increases this year outside the top 10 groups and helped it move up from 34th a year ago to 22nd this year.

IOOF managing director, Christopher Kelaher, said that it was the group’s “multi-brand and open architecture” which made it an attractive alternative for advisers looking to partner with a non-bank aligned dealer group.

All the other IOOF dealer groups that participated in TOP 100 survey this year, including Bridges Financial Services, Lonsdale Financial Group, Ord Minnett, and Shadforth Financial Group, also grew their planner numbers.

 

Top 10

The results of this year’s survey also found that the make-up of the top 10 groups had slightly changed since last year, with the arrival of another non-aligned group, Dover Financial Advisers. The firm posted the single biggest increase of planners, in absolute terms, of 72 advisers, or 24 per cent, counting year-on-year.

The data found the company leaped into ninth place from 14th last year and took over Westpac-owned Securitor Financial Group’s position in the top 10.

Although the majority of groups that were ranked as the largest by planner size hardly changed for the past three years, the 2017 survey saw a slightly different order with NAB FP falling two places and Commonwealth Bank’s group, Count Financial, moving up. 

Based on the data from the ASIC’s FAR, Count Financial managed to grow its financial planner base by six per cent, bringing the total number of its financial planners this year to 564.  

Furthermore, the only other non-aligned group that made it to the top 10, was Synchron which landed in seventh place, with 445 financial planners.

At the same time, Synchron managed to retain its position as the biggest non-aligned financial planning group by planner size even though the company announced a few changes last year.

In October 2016, its director, Don Trapnell, said he planned to gradually hand over the management of the firm to a new general manager and said the company would allow two years to find the most suitable candidate. 

At the same time, Synchron confirmed its objective for a conservative net growth “of nine to 10 per cent per annum over the next two years” which expected to see a number of its authorised representatives grow to 500 by September 2018, and would see the company as the “second largest licensee by risk and the fifth largest by adviser count”.

As far as other non-aligned dealer groups outside of the top 10 was concerned, InterPrac Financial Planning Group saw a considerable jump in a number of its planners, taking on board 55 new advisers, which translated into a 32 per cent growth, and helped move the company up in the ranking from 28th position last year to 16th in 2017.

In June, InterPrac’s managing director Garry Crole declared the company would remain independent of institutional influence, following Sequoia Financial Group’s proposed purchase of the licensee.

Crole stressed that one of the reasons the company found this proposal so attractive was the fact that under the terms of the deal, it would maintain a “non-aligned framework facilitating financial solutions free of institutional influence”.  

 




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