Adviser losses disappointing but not unexpected

The financial advice industry has seen a disappointing but not unexpected year, with current adviser losses year-to-date standing at 2,189, or down 10.61%, to a total of 18,446 active advisers but the “worst is yet to come”, according to Wealth Data.

However, the firm’s director Colin Williams noted that different peer groups faced different challenges in 2021, and although there would still be a bit of reporting in January that would be backdated to December, the groups could be already divided into so-called ‘winners’ and ‘losers’.

The data clearly showed that the investment advice peer group (with a focus on portfolio advice) lost less than 3% of its advisers while the accounting – limited advice which mainly provided self-managed super fund advice were down 537, or 27.12%.

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“We expect this peer group to suffer this greatest losses, at a proportional level, as advisers without passing the Financial Adviser Standards and Ethics Authority [FASEA] exam are withdrawn from the Australian Securities and Investments Commission [ASIC] Financial Adviser Register [FAR],” Williams said.

As for the largest peer group – financial planning, it lost 1,303 advisers. However, what was even more significant for this group was the fact that the number of new licensees stood at 119 versus 45 that closed.

As far as the individual licensee owners were concerned, the year saw Insignia (formerly known as IOOF) and AMP dominate the stage of adviser losses while CBA ended the year in third spot, after ceasing its advice arm.

Williams stressed that, with expected movement of the next few weeks with numbers backdated into December, the numbers would deteriorate.

“The worst is yet to come as we foresee significant losses as advisers either fail or opt not to attempt the FASEA exam. The losses may end up close to (-3,500),” he said.

However, according to Phil Anderson, general manager policy and professionalism at the Association of Financial Advisers (AFA), the number of active advisers at the start of the next year might drop even further to around 16,800 or even less.

However, he said there were “a lot of moving pieces in this calculation”.

According to the AFA, there were around 1,087 who had resat the exam (i.e. have sat at least twice) and had not passed yet. This was deduced from the FASEA figures which stated that “to date, 3,197 unsuccessful candidates have re-sat the exam with 66% passing at a re-sit”.

“In reaching the total who are continuing to be able to operate next year, we would add this number of 1,087 to those who have passed the exam,” Anderson said in a statement to Money Management.

“We are inclined to just add the 15,500 that FASEA have disclosed in the following line: over 15,500 are recorded as active financial advisers on ASIC FAR, representing 82% of active advisers on ASIC’s FAR.

“[The AFA’s calculations] covers the 15,500 noted as passed and active on the FAR in the FASEA email, plus the 1,087 who we have calculated as having completed the exam at least twice, but are yet to pass. 

“Then we can add on maybe a bit more for time share advisers (147) and maybe professional year students, however not all of the 1,087 who have failed at least twice will still be practicing.”




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Wasn't this the intended outcome - to cull out the less committed ones and those Planners in name only?

If this was all "foreseeable" then can Jane Hume explain if she intended this to occur, or why her experts did not ware her about this result?

There is more than one player in this long ongoing saga not just Mr Frydenberg and the government
As we have just been advised the government is setting yet again another pathway for experienced advisers Why the hell was this not done 4 years ago
Suddenly there is an election on the horizon and Labor have advised they will implement such a structure! Really ! It took the opposition to make these buerocratic fools sit up and take notice. Not one adviser ever asked their thoughts !
FASEA? Well there is not enough time today to outline this ridiculous bunch of misfits and their outrageous pointless exam
The one point that still is not being addressed is the case of 60% on upfront commissions brought about by the insurance companies ( that have been sitting in the back ground for years) trying to unwind a mess of their own making with unsustainable products ! What were the actuaries doing ? It boiled down to shear greed and market share.
We were deprived of overseas conferences that cost these companies millions on the pretend they were harming the clients ! How ! Every company did it The commissions reduced by 50-60% ( it’s actually more if you work it out ) claw backs out to 2 years and an ongoing increase in premiums by all of them of 30-50% not once but several times Level premium increases ( I often wonder what clients say to their advisers when they get an increase they were told would not happen) can someone tell me where al that money has gone to and is going to now?
Advisers will continue to leave ! Regardless of “ pathways” as apart from all the onerous red tape you need to go through just to get the client on board is not viable based on the current remuneration structure A few things out of your control go wrong and you can quickly find yourself in financial difficulty.
Go back to the beginning and start again ! This time get your facts right about the 413 report and “ so-called “churning” of business or come 2026 there will be no industry and that’s the bare truth of this LIF disaster

The red-tape and additional fees and taxes introduced by the Liberal government have been shameful.

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