Rate of adviser exits to prolong

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.

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“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.

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Do you recon you could find more interesting information/stories to print rather than this incomprehensible statistical information (every week)? Who cares?
Advisers will leave the industry now and in the future. Have you ever thought that a reason advisers are leaving could be because they are baby boomers and reached retirement age? Give us a break.

All the extensions won't stop advisers voting for their sanity by leaving vs the endless annual renewals, trustee advice requirements and 70 pages SoAs.

Why are you writing 70 page SoAs? If its because your licensee requires it - change licensees. Neither the Corporations Act nor ASIC require. Read Regulatory Guide 175 to understand the requirements. Don't always blame regulators. What is in an SoA (and its length) is the adviser's responsibility.

In reading RG175 it talks about the demonstration of adhesion to 961B(2). This is important as 961B(2) is huge.

If you've got a bulletproof SOA for personal advice which is considerably shorter in length, whilst remaining adhesive in to 961B(2)...... I'd encourage you to please share it with us.

Or perhaps explain which of the 70 odd pages of the current SOA's you would cut out.

Most of the safe harbour ( 961B(2)) requirements do not need to be documented in an SoA. They can be done with file notes and other supporting documents. And definitely not 70 pages worth. Arguably safe harbour is not even needed at all if the advice is self evidently in the client's best interest. You are making things hard for yourself Max.

At last Anon, you are a person who actually understands the requirements.
Max, what you are suggesting is that a 70 page SoA will mean you have complied with the Best Interest requirements (961B]. Read RG175.170-172 and 191-200 and 213-217.

Where in the provision of modern financial advice does the concept of 'self evidently in the clients best interest' actually exist?

The compliance test for financial advice is based on process, not on outcome... This is why I'd love to see 961(B)2 eventually removed. That was a future consideration covered in the Royal Commission but is highly unlikely to change any time soon.

I agree that the peacock with full feathers show of BID demonstration doesn't need to be in the SOA document however an awful lot of it does need to be there.... particularly at the moment.

If the SOA is about providing the required information to a client to meet RG175 which is largely placing the client in a position to make an informed decision by consent, then which parts could you reliably take out of these longer SOA's whilst not opening yourself to future risk?

I don't know what's in your 70 page SoA to take out. All I know is I would write an SoA in accordance with the RG paragraphs I stated.

Sounds like a sticky problem.

Ok so now we are at 15,000 estimated ARatings say 13,000 Number of registered advisers on FAR is 19,100

But can we get the actual number of advisers vs stockbrokers and limited license holders and timeshare people

Can we get a break up of those numbers my guess would be “advisers” would be already less than10,000 even 10,000 seems extremely high

Who cares? Lets move on.

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