Client book no longer a barrier to advice recruitment

With the advice industry experiencing a loss of advisers, holding a solid client book is no longer a requirement when it comes to recruitment. 

Melbourne-based Kaizen Recruitment noted that when it comes to recruiting in the financial advice and wealth management space, demand has been strong, but there is a notable shift in what firms are seeking.

Previously, firms had been seeking advisers with a large and growing client book and associated funds under advice.

“Traditionally, clients have shown a preference for financial advisers who possess an established client base or book. However, recent market observations indicate a shift in this trend,” it said in a quarterly update.

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“While a significant portion of clients still value advisers with a solid book, there is growing openness towards professionals who possess extensive experience in the advisory space but may not have an existing client base.

“Clients are increasingly recognising that an adviser’s ability to provide sound financial advice and deliver successful outcomes stems from their experience, proficiency and deep understanding of the industry.”

Reflecting on why this might be the case, Wealth Data founder Colin Williams said there are two potential streams of thoughts behind this. Firstly, firms being concerned with the quality of past clients as ASIC ramps up scrutiny; and secondly, firms already have a large existing client base. 

“People are concerned about the quality of the advice and the potential compliance risks arising from that.

“Secondly, when an adviser has left the industry, they will have left behind their clients and got rid of their book, so the firms have many clients already ready for the adviser to look after,” Williams noted.

There has been a steep decline in the number of financial advisers in recent years but demand for financial advice remains present with around 2 million advised Australians last year, according to Adviser Ratings. 

Instead, when a firm is looking to hire, more focus is given to their educational qualifications and that they have passed the Financial Adviser Standards and Ethics Authority (FASEA) exam. For a licensee looking to acquire a firm, they check if the culture of the two firms align – that it has several advisers and whether they have good contacts in the region. 

The smaller need for a client book is also seen when it comes to acquisitions, with Virtual Business Partners stating firms are now looking to acquire companies with a certain advice specialisation or a particular demographic.