A spotlight on Australia’s average financial adviser
In its 2023 Landscape report, data agency Adviser Ratings has examined what you can expect from the average financial adviser in Australia.
At the end of 2022, just over 15,800 financial advisers were recorded as working in Australia, down from a peak of 27,959 in 2019. The numbers, which saw a 4 per cent decline in 2021 represented a stabilisation seen for the first time in five years after a 20 per cent decline between 2020 and 2021.
“There are a few signs that the exit rate is finally slowing down. Last year, we saw a third of exits we had seen a year earlier with advisers who had been delaying their departure calling time when the final FASEA exam deadline arrived. We also saw the highest number of entrants in four years, but there’s still much room for improvement there.”
The report found that the final Quality of Advice Review recommendations had encouraged a level of “renewed optimism” in the industry, with advisers supportive of the move to scrap Statement of Advice (SoA) documents.
According to Adviser Ratings, consumers could expect the average adviser to be 49 years old with an annual salary of $145,000.
In regards to educational levels, the average adviser was university degree qualified, whilst only 50 per cent of practice advisers met the educational requirements.
The data followed after the Treasury opened a consultation on the proposed experience pathway, which could recognise advisers who passed the exam, held 10 years of experience and had a clean record.
Advice practices held $205 million in total funds under advice with a practice size of one to 10 advisers and the average individual adviser held an average of $82 million.
The average firm brought in a yearly revenue of $500,000 to $1 million and had an average client base of 119 clients, 91 of whom were recurring and 28 of whom were one-off clients. Overall, advisers were taking on a higher volume of clients, eight more than in 2020.
Looking at the typical client, they were aged 56 years old and the firm charged them an average annual fee of $4,250. This had increased by 5 per cent from $3,710 in the previous year, with most practices saying they had plans to lift fees further in 2023 as a result of wage pressure and high inflation. The maximum fee charged was $13,000.
“Despite soaring inflation, adviser fees haven’t surged at the rate we’ve seen previously … For some businesses, pressing pause on significant fee increases resulted from efficiency gains in the practice. One example of this is investing in new technology that allows advisers to issue compliant advice more quickly, which in turn gives practices the chance to service more clients without substantially raising fees,” the report said.
“Most advisers we surveyed told us they plan to lift fees further in 2023 as the CPI ripple effect well and truly kicks in and wage pressure continues.”
Less than a tenth of clients were under 40, the report said, which presented an opportunity for firms to target younger clients and benefit from the transfer of intergenerational wealth.
Building superannuation and nearing retirement were the most common reasons for seeking advice amongst clients. Additionally, the typical client had an above-average level of financial literacy.
Angus Woods, Adviser Ratings’ chief executive, expressed a positive outlook for the advice industry moving forward.
“Advisers who have invested in their business and profession are starting to reap the rewards, with high client demand, profitability and a greater menu of tools to help them succeed,” he said.
“Australians also recognise advisers play a critical role in planning for the future and managing shorter term financial pressures, particularly at a time of interest rate rises, market gyrations and inflation.”
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