The Financial Adviser Standards and Ethics Authority's (FASEA’s) recent announcement to allow all advisers to sit the November exam will not change the current predictions for the industry, but may prolong the timeline for adviser numbers to fall to 15,000.
Wealth Data’s director, Colin Williams, said that FASEA should better correlate pass rates with advisers who had the ‘current’ status as according to the Australian Securities and Investments Commission (ASIC’s) Financial Adviser Register (FAR).
According to Williams there was a general assumption that all advisers passing the FASEA exam held the same current status which was not often the case.
“We will need some time to digest all of this news as to how it would affect the number of advisers post the initial need to pass the exam of 1 January, 2022,” he said.
“I did initially write that the first extension of time would not make a big difference to our estimate that the number of advisers would reduce to 15,000. It may however push out the date to get down to 15,000.”
Williams also said that the May’s exam pass rate of 69% was in line with Wealth Data’s model which assumed a 70% pass rate.
Commenting on advisers who passed the FASEA exam but did not have a current status on the FAR, Williams said: “Over the last four weeks, 953 roles have resigned affecting a total of 943 advisers. 716 are not current of FAR.
“From our data, we know that 141 or 20% of the advisers had passed the FASEA exam. If we ‘gross up’ the number to account for the advisers who passed but not publicly disclosed the passed result, we estimate it will be approximately 200 or 28%.”
Of those, a total of 227 advisers had managed to switch/find another role, he said.
“We know that 131 passed the FASEA exam or 58%. If we gross up for those that have not disclosed their pass result, we estimate the number would be approximately 190 or 84%.”
This week the number of actual advisers increased for the very first time in a long time to 19,104, marking a net growth of 22, which was mostly attributed to new and small self-licensed firms.
However, Williams warned, there might be some minor changes for the financial year in the coming week, as licensees have 30 days to report adviser movement.
Looking at the year to data Williams said: “The movement over recent weeks clearly demonstrates how hard it is to grow in the current environment. Only 13 licensee owners, with more than 50 adviser roles have made gains for a total of 82 roles. Oreana was at the top with 20, followed by Centrepoint at 13, and CountPlus at 11”.
At the same time, 39 licensee owners were in the red and accounted for a total loss of 1,467 roles, with four owners having had lost over 100 roles.