Former bank-licensed advisers have moved to privately-owned licensees, with a preference for boutiques, according to Adviser Ratings’ ‘Adviser Musical Chairs Report’ for Q4 2021.
The study, which looked at adviser movements, found that the quarterly drop in the financial adviser workforce stood at -8.2% while the proportion of bank-licensed advisers who departed over the quarter was down at -38%.
At the same time, the boutiques in the privately-licensed space posted a 4% growth and the share of the market privately-licensed as of Q4 2021 was 61%.
The study confirmed that the biggest losses were recorded in the bank and limited licensee sector, with more than 200 bank-licensed advisers departing the industry or switching licensees, the segment now had only a few hundred advisers on the books.
Following this, limited licensees faced a similar scenario, as accountants continued to lose interest in advice, with limited licensees accounting for less than 3% of the market.
“In the past year, we’ve seen many of the heavyweights enter takeover arrangements or exit the market completely, which has shifted advisers to a spectrum of new licensees. For example, the IOOF acquisition of NAB/MLC dislodged 411 advisers from MLC-aligned GWM Financial Services in 2021. Last year, we also saw the closure of Financial Services Partners, which displaced 125 advisers, and Godfrey Pembroke, which left 77 needing new licensees,” the report said.
At the same time, there were a few mid-sized to large outliers that kept strong headcounts amid the general industry decline, such as Morgans Financial, Capstone or Fortnum Private Wealth.
The report also confirmed that among advisers who chose to stay, formerly bank-licensed advisers moved mostly to privately-owned licensees, with a particular preference for boutiques.
According to the study, since 2017, the small, private licensee, with one to 10 advisers, was the only segment to have grown amid the mass exodus.
“There are now more than 700 more advisers licensed in this space than there were five years ago. Advisers tell us they don’t miss being tied to limited product lists; the main teething problems listed have been around access to some of the traditional technology and support services that big licensees could provide at low cost,” the report read.
Industry overview Q4 2021
Source: Adviser Ratings
