The third quarter of 2024 saw the first positive increase in adviser numbers for 12 months, with new entrants overwhelmingly choosing to join privately owned firms.
In the quarterly Musical Chairs report from Adviser Ratings which covered 1 July–30 September, the research house said the industry saw a net increase of 101 advisers.
This was an increase of 0.6 per cent on the previous period and the first positive increase for 12 months.
The quarter also saw 530 advisers switching licensees, representing 3.4 per cent, 160 of whom returned after ceasing in the previous quarter at the end of the financial year.
“This is primarily driven by the movement of advisers to privately owned licensees out of diversified, stockbroker, industry superfunds and limited licensees, continuing our observation from Q2 that most of the change involves individual advisers moving to new licensees which represented a better fit for their goals and growth plans.”
On the flipside, 248 advisers ceased practicing during the quarter, in line with 251 who ceased in the same period a year ago.
Adviser Ratings said the overall growth in the quarter was driven by 189 new entrants entering the space and 160 advisers who previously ceased returning at a new licensee, plus the remainder who are returning to the industry.
The 189-new-entrant increase was particularly strong compared to the 91 who joined in 2023 and 75 in 2022.
“Q3 tends to show a jump in new entrants, but the 55 per cent increase is a significant improvement on the 22 per cent and 33 per cent increases seen each of the last two years.”
The majority of these are looking to join a privately owned firm as banks and diversified firms lose talent to nimble, autonomous entities.
Privately owned firms (1–10) hold a 27.6 per cent market share at 4,281, with the total number of advisers working in privately owned firms of any size at 11,124, representing almost three-quarters of the market.
In contrast, some 1,646 currently work in a diversified firm, and this has steadily come down from 3,102 in December 2021. Some 209 work in a bank, down from 327 at the end of 2021.
“The profession is shifting towards independent, smaller practices that are looking for licensees who will support a client-centric approach to advice delivery and regulatory adaptation.
“Licensees not supporting or being seen to conflict with this growing focus on professionalism are seeing advisers looking for new support; however, over time, it’s possible to see smaller licensees also grouping together, given the economies of scale grow with more advisers under a licence.
“The popularity of boutique licensees continued in Q3, with most new AFSLs set up for a single or small number of advisers, with all but one being 1–5 advisers. Unlike other quarters, however, most (52 per cent) of these advisers came from other small, privately owned licensees (1–10).”
The diversified sector is set to fall further still during the fourth quarter as AMP completes the sale of its advice and self-licensed offering to Entireti, which is scheduled to complete by the end of 2024.
This follows the move by Insignia to allocate Consultum and RI Advice into Rhombus Advisory which was formally completed on 1 July. Last week, it was reported by Wealth Data that Rhombus Advisory, which was formally launched on 1 July, is approaching 500 advisers and is Australia’s fifth-largest licensee.
“The finalisation of Insignia transferring Consultum and RI Advice to Rhombus saw a decrease of 509 advisers registered in diversified licensees to private licensees.
“Add this to the news of AMP selling their AMP Financial Planning, Hillross and Charter Financial Planning licensees to Entireti, and AZ NGA’s purchase of stakes 16 AMP Advice practices, which will shortly see an additional 800+ advisers transfer to a newly formed privately owned licensee.
“In combination, these movements will see diversified licensees reduce from 14.6 per cent of the adviser population at the beginning of the financial year to around 5 per cent by the end of 2024.”
