The number of financial advisers could fall to 14,000 in the next couple of years, according to Association of Financial Advisers (AFA) President Sam Perera, but this presents opportunities for those who remain.
Speaking at the AFA roadshow in Sydney, Perera said many advisers had struggled with the red tape and regulations needed to run a financial advice business.
Adviser numbers had been declining over the past few years since the Hayne Royal Commission and were expected to fall to 17,000 this year.
“We suspect we will see 14,000 financial advisers in the next couple of years,” he said. “This is down from 26,000 in 2018, we are a dying breed and that is really sad. In those numbers, we have lost some good, hard-working people who were great advisers.
“We have seen a number of great advisers leave because it got too hard, it’s been unrelenting. It’s been hard since the Royal Commission but even before that, we had to deal with compliance and red tape.”
He highlighted the mental health toll that the changes had taken on the industry. Research last month found more than 80% of advisers said the changes had “significantly” impacted their stress levels.
“The mental health toll is very confronting, it has been very hard and now it is being realised outside of the sector as well. Firms have had to adjust their business model by merging or selling up and adjust for the new evolution of financial advice practices. But you are not alone, your peers have also been finding it hard.”
However, he was hopeful the Quality of Advice Review would help the industry turn a corner and said the AFA would be making a submission encouraging work on best interest duty, annual renewals and recognition for prior learning.
He concluded: “Where there is complexity, there is need for advice and that has never been greater. We will continue to work to give you the policy settings for you and your business to thrive”.
Comments
I'd be surprised if there would be even 10,000 by 2026. I just don't think it's sustainable anymore and there are a lot of other vocations an adviser could easily transition to and which is exactly what the 11,000 who have ceased have done
leaving a lot of very experienced and older advisers in place, but they can't remain working forever so in 5 years' time I see the numbers halved to 7,000.
what a total mess. 100 to 150 leaving each week and 2 new entrants.
p.s. what amazes me is that the AFA and FPA think they will survive even more bewildering are the dealer groups who think they will be just fine.
Financial planners are Mungo man and mungo lady.
Last one out shut off the lights.
Mungo man ….. is out. What a relief.
Good night everybody.
when the easy money of churning and ongoing service fees in super had scrutiny (besides the guys at retirement age), the rats jumped from the sinking ship they created. There are a lot of good advisers, but it expanded too big - there is just enough people who can benefit from advice to cater for 26,000 advisers...so may 14k is more the right amount. maybe less - i dont know. still in FS, but its good not to be in FP anymore - it was constant negativity from the ABC 4 corners, the Royal Comm, ASIC, AFCA....and also cleaning up books of adviser who charged a decade of advice fee but never gave advice.
Most of the churning was caused by the life insurers who reduced their premiums to increase their market share then when the premiums became non sustainable they increased them sharply to cut their losses. If you had clients complaining what where you supposed to do. Lose the business or switch to another life office.
I get what your saying, however if you knew moving to the cheapest, who would then just put there’s up the year after, seems those riskys can’t play innocent. They were complicit and loved clients complaining about premiums.
Obviously you know little about the insurance world. Your comments are insulting and inaccurate.
Don’t be sensitive mate. I looked at 500 advisers as an auditor and saw asic take action. The top say 3-5 riskys at every DG churned. Simply no way to get to that level with out it. Facts bruz. You may be a decent one, and maybe only know a couple of other practices intimately. I’ve seen hundreds over a decade. How do you think sole advisers can make a few million revenue a year?
Righto - You sound like another person who couldn't hack it as an adviser (and became an auditor) who loves to put all advisers in the same box and bag them constantly. Just like all your comments on this article. Hopefully for the sake of the industry you are not involved anymore. Have a nice day.
auditors are getting $350 per day. that must make them really insane when my hourly rate is $400 (actually charge more on complex matters).
a lot of advisers who couldn't make it become auditors. they must be so angry.
Yet every sledge on auditors say they were never advisers.
Most auditors are failed advisers who didn’t pass their 3 months probationary periods.
I am a Fasea passed successful adviser of more than two decades standing.
I have many different marketing channels including social media and linked in.
It’s called running a business. Something that might be beyond your grasp hence your reincarnation as an auditor.
Inflation is skyrocketing how you gonna cut it on $350 per day gross before tax matey ?
P. If what I said was untrue tell me who possibly wants to be an auditor. Exactly no one! Unless of course they have no other readily marketable skill.
P.s.s you must be struggling financially hope you don’t have a mortgage ( practicing empathy right there )
Clients just moved to Industry Super - charging fees for Intra Fund Advice is the new game in town - and FUM still rules it seems.
https://www.moneymanagement.com.au/news/superannuation/two-%E2%80%98mega...
Sam, one small correction, I think there used to be just over 29,000 advisers around 2018-19.
If you look at the current numbers where more than 12,000 have left the industry/profession in just over 2 1/2 years , you will arrive at the current figure of around 17,000,..... and diminishing.
If you think the carnage from government, the regulators, including other vested interests has slowed, I don't think you ain't see nothing yet !
Jane Hume and Josh Frydenberg presided over this destruction.
Been in the industry for fifteen year. I have met the education requirements including passing the FARSEA exam, yet I am currently studying to get out of the industry. It's become such a terrible profession to work in and even things that should be simple have become overly difficult. All of the non-advising roles (auditors, management etc) filled with those that have no experience advising, and those that have any experience were failures, only having lasted a few years. Sadly a large proportion of those that will remain will be the "humbled", self congratulating advisers on LinkedIn whose posts are only liked and commented on by other egotistical advisers. Sad to see what this profession has become.
If no one in the industry is good enough to audit your files, then I think you will be one of those egotistical advisers left on linkedin
It is so sad that our industry did not aggressively defend itself like the highly successful Mortgage Broking campaign. The big Banks threw us under the bus and compliantly perished!
You are spot on. Our Associations were impotent.
the mortgage brokers won't survive. the big banks will complain to the government to make it fee for service. after that, the brokers just won't survive. CBA will be the first mover just watch. they are getting ready to decimate the mortgage market using "positive customer outcomes " as a weapon. Comyn already said at the royal commission when asked by the old git Hayne whether mortgage brokers did something or nothing for their trail. Comyn said "nothing".
the smarter brokers are already moving into very complex work and also charging a fee already, a similar thing will happen in the mortgage market as has happened in the financial advice space.
the trail is already legislated to be removed, it's just a matter of time before it does.
The observations and comments made by Sam are entirely accurate and succinct as usual.
After 32 years of practice and running my own business since the age of 24 and degree qualified, I have experienced enough and seen enough to be well informed on how the discriminatory process against financial services and advisers has been implemented especially over the last decade.
I thoroughly enjoyed the role in educating, mentoring, and helping clients over 3 decades protect their families and businesses, understand the complexities of the ever changing superannuation system and how best to plan for their retirement, understanding the importance of estate planning at an earlier age, assisting in pre-retirement and retirement planning income stream strategies and the vital importance of the transmission of complex and confusing information and technical strategies into an understandable format so clients can see, visualise and be in control of making an educated and meaningful decision regarding their financial life.
I had many professional and non-professional clients who valued the relationship and trust formed over many years.
As I was told very clearly as a young adviser..." No one cares how much you know, until they know how much you care".
I received many referrals from satisfied clients and also referred business to many other professionals
(with no financial transaction between parties at all over 32 years) when a client required specialised advice that had been identified. The manner and method in which I treated my clients was valued by other professionals.
However, the last 6-8 years of relentless regulatory discrimination, constant unfair targeting and blame by varied interest groups, politicians, ASIC, and the general media and a feeling that no matter what was presented, stated, documented and highlighted was always going to be totally ignored, attacked, ridiculed as self interest and misrepresented shattered and broke my soul as a person.
For 5-6 years I battled unknowingly with the insidious symptoms and impacts of Major Depression & Anxiety, feelings of low self esteem and self confidence, overwhelming feelings of rumination, completely broken sleep patterns, nervousness, extreme tiredness, frustration and inability to focus and maintain any sort of concentration.
I pushed and pushed and pushed on because as advisers that is what we do and people rely on us, until, in the end, people very close to me well and truly let me know that I was in a very steep spiral downward and I urgently required professional help.
I was completely and comprehensively burnt out and diagnosed with Major Depression, Chronic Anxiety and PTSD.
I could no longer continue on any level. My sole focus had to be on me, otherwise, it was highly likely I may not be around too much longer.
I was forced to transition my business 5-6 years earlier than ever expected and leave my occupation after 32 years based on my health.
All other aspects of my life, health and business had always been stable.
I do not want my situation to be seen as a sob story or to be overly self indulgent.
All I want is for some respect and consideration to be given by the new Govt to the advisers who remain and for the pain and suffering that so many have experienced at the hands of a Liberal Govt that simply didn't care.
I have voted Liberal all my life and the disgust and despondency I feel regarding their mistreatment of a profession that delivers so much value to consumers in so many aspects of their lives is unfathomable.
They have overseen and supported a programmed and manipulated dismantling of financial services and many adviser's businesses and ignored the mental health impact that has resulted in many suffering debilitating symptoms with many suffering in silence.
Unfortunately, I believe Sam's prediction of 14,000 remaining advisers is optimistic at best and would not be surprised at all if this were to be closer to 12,000 or possibly even as low as 10,000 left.
And those hundreds and hundreds of thousands of clients who once had an adviser they could contact at anytime to discuss, talk through concerns, gain clarity of thought and to implement a financial advice programme that made sense and gave them direction are now left in the wilderness without the relationship, friendship and feeling of trust that someone is looking out for their financial well being.
Good luck Sam and good luck to all those advisers who have shown the courage, determination and resilience against all odds to keep pushing through the most difficult circumstances and environment ever seen in this industry.
What you do is so very, very important and I hope that Stephen Jones and the Labor Party will recognise the failure of the Liberal's ignorance and show common sense, compassion and co-operation that would be in everybody's best interest.
Firstly, Labor twisted Libs arm for the royal commission so you’re dreaming if you think they won’t finish this industry off. They are the party of the industry fund. In regards to your story, find it hard to believe you had a perfect record for 32 years, and your client loved you, along with professional colleagues, then will 5 years you were ruined. Sounds like asic caught up with you.
Really? I was in a similar boat, I think you have a very poor understanding of what actually happened in the small businesses if you think ASIC caught up with all these advisers that had a tough time. Yes we have perfect records, but this doesn't mean we haven't made mistakes. I know i must have forgotten to delete a TFN somewhere in my files over the last 20 years, but it doesn't mean we should be hung for it
I'm a 20 year planner & can relate to many of the feelings & emotions you have described in this wonderfully written piece. I hope you can find peace in your new life after advising.
Great commentary Experienced. I felt exactly the same & thanks for sharing your story. I felt so alone during those darkest times in the RC and product providers, ASIC & Govt cutting us off and no standing up for us
The first 10,000 Advisers to go were Banks etc, we need to now protect the remainder. The key legislation that killed Advisers was LIF/FASEA of which the FPA/AFA/FSC supported. With a new Minister lets hope things are better.
Yes the FPA/AFA have been deeply conflicted trying to look after their mates and not advisers. However, LIF has had no impact on me and when it comes to LIF you're living in 1980. The biggest impact is bad regulation and poorly worded best interest obligation, which your new Labor mate has signaled won't be changed at all. Secondly, your New Minister won't be running the show, Choice & the CEO of AustralianSuper will be in charge. Even if Insurance commissions got fixed no one would be providing insurance advice due to the regulatory minefield and the safe harbor steps. When Labor solely gives carves out to Industry Super funds and Advisers are left with this bad regulation I hope you step down Peter. If I'm wrong and I hope I am, well.....I'll buy you a beer....but this ain't my first dance at the Rodeo and I know the writing is on the wall for human lead advice.
When you clearly identify yourself 'Old Bob' we can talk.
Sorry Peter, but ASIC are like the Gestapo, adversarial, hunting Advisers because our clients love us as we save clients tax, get them more Social Security and keep large insto's and super funds accountable. Sadly my SoA's are tailored and have 1 or 2 spelling mistakes in them which comes with chemical castration and a jail term of 20 years. We're a threatened species. So all that means is I'll have to stay as "Old Bob" for a while.
I like it old bob. my names are either bubba trump or mungo man (get it).
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