Large AFSLs see significant growth amid advice consolidation

The shift in scale and consolidation has led to substantial growth in large privately owned licensees, which have tipped past 20 per cent of advisers for the first time to make up 28.3 per cent of the industry. 

The latest Adviser Ratings Australian Financial Advice Landscape Report has found that advisers working at privately owned licensees with more than 100 advisers now make up 28.3 per cent of the industry, with 4,375 advisers working at a firm of this size.

This is up from 19.7 per cent and is the first time this sector has ever tipped past 20 per cent, having been slowly rising from 13.7 per cent in 2017. Altogether, these Australian Financial Services Licences (AFSLs) represent 7.1 per cent of the industry at just 20 AFSLs.

While a further 28.3 per cent sit in small privately owned licensees with between one and 10 advisers, this number has grown by a far smaller amount during the year from 26.9 per cent in 2024.

Some 21.3 per cent of advisers sit in privately owned licensees with between 11 and 100 advisers, which brings the total number of advisers working at a privately owned AFSL to more than three-quarters of the industry. 

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Adviser Ratings attributed the shift to the sale of the AMP advice arm to Entireti and the separation of Insignia’s advice business last July into salaried ones at Shadforth and Bridges who remain at Insignia and self-employed ones from RI Advice Group, Consultum Financial Advisers and TenFifty who moved into Rhombus Advisory.

“This year’s significant shifts came with the transition of the former AMP licensees to the newly merged Entireti, while Insignia migrated some of their licensees to Rhombus,” the report said.

“While not all practices transitioned to the new entities, these two new licensee conglomerates led to the privately owned (100+) licensee category jumping by 8.5 per cent to become the equal largest cohort at 28.2 per cent.

“The practices which did not transition primarily set up their own licences, leading to a 1.4 per cent increase in the privately owned (1–10) licensee category.”

It also noted the majority of new entrants and returning advisers have opted to join a privately owned licensee, which it said reinforced the “decisive shift towards independence”. 

“The 1,270 adviser switches recorded in 2024 represent not industry instability but active optimisation, with 83 per cent of these movements occurring within the private practice ecosystem as advisers fine-tune their business environment rather than flee unsustainable models.

“This fluid internal market, combined with the overwhelming preference of new entrants for independent models, confirms that advisers’ fundamental question has shifted from ‘Will I choose independence?’ to ‘What type of independent practice model best serves my clients and career goals?’”

The typical practice

Looking at fee structures, median advice fees have risen 18 per cent over the past year to reach $4,600, reflecting the increased cost of delivering compliant advice and the shifting value proposition.

Funds under advice per adviser stand at $99 million across Australia, although it rises higher than this in South Australia and Western Australia to stand at $107 million and $105 million in those states respectively. 
Funds under advice per client were $758,000, up 11 per cent on 2024. 

The average revenue size for a practice with one adviser was $607,000, $1.8 million for a firm with two to four advisers, and $5.1 million for a firm with five or more advisers. 

Some 41 per cent of practices achieved growth during the year, while only 3 per cent experienced a revenue decline. Over half of practices achieved a profit margin of 20 per cent or more, up from 47 per cent last year.