Micro-AFSL trend to continue in 2024: Wealth Data

Wealth Data self-licensed licensees

8 January 2024
| By Jasmine Siljic |
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The shift towards smaller advice practices obtaining their own Australian financial services licence (AFSL) will resume in 2024, according to Wealth Data’s Colin Williams.

While several trends and legislative changes impacted the financial advice industry in 2023, the move towards micro-AFSLs was a key shift that will continue this year. 

Speaking to Money Management, Colin Williams, Wealth Data founder, has been observing these movements on a weekly basis.

“While over the last few years we have focused on the net losses of advisers, we have seen some significant shifts in the market with a swing to what we refer to as ‘micro-AFSLs’ – effectively what was once a small practice at a major licensee now opting to obtain their own AFSL. 

“I think some in the profession saw this trend as a bit of a fad, but it has continued,” he explained.

As a result, larger advice licensees are starting to take this shift very seriously, Williams noted, with several firms producing service packages to meet the needs of smaller AFSLs.

However, this shift may see a slight slowdown in 2024 as licensees and investors in advice firms look towards consolidation.

“We have seen licensees take active positions in some of their advice firms, and I suspect this will continue in 2024 and create some additional competition to other groups who have been busy investing in advice practices over the last few years.”

Money Management previously explored the reasons behind advisers choosing the self-licensing route. According to Adviser Ratings, the benefits include having a flexible business model and the ability to have a more diverse or specialised offering.

A year to ‘breathe again’

Reflecting on 2023 as a whole, Williams described that adviser losses have slowed in comparison to previous years.

“The numbers have been very stable this year and a welcome change to what we have seen post the royal commission and the introduction of the FASEA exam (Financial Adviser Standards and Ethics Authority exam).”

Although the advice profession is down 128 advisers this calendar year-to-date (as of 14 December), the numbers are up by 114 for the financial year-to-date.

Moreover, the 370 new entrants who joined the industry throughout 2023 supported these signs of stability, Williams added. 

“This week we saw another 145 pass the financial adviser exam held in November, and this number of passes has been pretty consistent all year for the four exam sittings. It would be nice to see it go up, but it is solid for now and that’s a good thing.”

Overall, the founder said 2023 was a year of finally “being able to breathe again”, with firms focused on growing their businesses under more stable conditions. 

Williams continued: “While there has been a lot of noise, especially about the experienced pathway and the Quality of Advice Review, this is a much better place than worrying and managing mass adviser exits which exited through to the end of 2022.”

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