4% of planners intend to stop giving advice

Only 4% of financial planners intend to stop providing advice in the year ahead, and a further 3% the year after, according to Investment Trends.

Investment Trends’ latest planner report found the underlying number of planners in Australia remained steady at 17,500 in 2020, and that industry attrition “would not be seismic”.

Investment Trends research director, Recep Peker, said: “Financial planners remain resilient against a shifting regulatory landscape, disruptions from major players entering and leaving the wealth management space, and the recent pandemic-induced market volatility”.

However, in 2020 a record high percentage of 41% of planners said their practice was less profitable compared to last year, up from 38% in 2019 and 18% in 2018.

“While COVID-19 has added to the host of challenges that planners were already grappling with in their business, their top challenges remain compliance obligations (67% cite this) and providing affordable advice (46%),” Peker said.

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“Still, some advice practices have performed better than their peers. The industry’s most successful (by net profit margin, client and profitability growth) appear more adept at handling compliance-related obligations through their technological efficiency.

“These high performing practices were also far more likely to be prepared for COVID-19 related disruptions from a technology and operations perspective, highlighting the importance for all planners to optimise their technology stack for operational and client-facing benefits.”

The report also found that 30% of planners now held their own Australian Financial Services Licence (AFSL) or operated in a boutique AFSL – double the amount in 2016. Another one-in-10 were considering becoming self-licensed.

Of the self-licensed planners, 92% outsourced or used third-party expertise for compliance/audits, research, professional development and paraplanning.

However, it found that 27% (up from 12%) had a need for developing effective advice/review processes, 20% (up from 9%) needed best practice examples, and 14% (up from 8%) needed technical support.

“All planners – whether self-licensed or part of a licensee network – seek greater support from providers across the financial planning value chain,” Peker said.

“Through the pandemic, planners most often acknowledged the support received from their colleagues (58% cited ‘good’ support) and licensee (43%), but more work can be done by investment product providers (33%), platforms (26%) and professional associations (18%).”