As the calendar hits December, there are 16 days until the deadline of the Quality of Advice (QOA) Review.
The QOA, which was being led by Michelle Levy, was due to be submitted to Government on 16 days and its proposals had been both positively and negatively received.
The reforms could benefit two million Australians, according to the FSC, and the use of digital tools was also welcomed but measures regarding life insurance commissions had prompted some concerns. Another concern was the potential outcome of banks and superannuation funds having a larger presence in the advice landscape.
Money Management has examined the current state of the adviser landscape ahead of the changes from adviser numbers to fees to licensees.
Adviser numbers
There were currently 15,894 advisers in the industry, having dropped below 16,000 for the first time in October, according to Wealth Data.
The largest loss this year was seen in early October following the deadline for passing the financial adviser exam on 30 September when it lost 295 advisers in the week to 7 October. The pass rate for the final exam had been 52%, up from 42% in the previous sitting.
Firms which had experienced significant losses included Insignia, AMP and WT Financial which had lost 239, 227 and 147 in the 12 months to 24 November.
Licensees
Count Group was the only licensee group which was showing positive movement over the last 12 months, according to WealthData, which gained 38 advisers. The firm which saw the biggest losses over 12 months was Insignia which lost 239 advisers.
The busiest quarter for those switching licensee was Q3, which saw some 650 advisers make the switch, according to Adviser Ratings’ latest Musical Chairs report. It also found there had been a move for advisers to opt for solo or boutique licensees rather than big licensees.
When it came to licensee pricing models, the most popular remained a flat fee per adviser which was used by 64% of advisers, followed by a percentage of the annual turnover at 40%.
New entrants
There had been over 350 new entrants join the industry this year, with Insignia taking the lead with the most hires of provisional advisers at 24 followed by AMP at 21, according to Wealth Data.
In particular, the number of provisional advisers appointed during Q3 of 2022 rose to 129, twice the number who joined in Q2 (49) while 26 were appointed in Q1.
Cost of advice
On average, Australians were prepared to pay just over $1,100 for financial advice, a Finder survey found. But a separate survey by Investment Trends reported consumers were now willing to pay $770 on average for limited advice.
This was in stark contrast to fees charged by advisers. Padua’s annual Advice Fee Data Report said initial advice fees charged by advisers on a per advice document basis increased from $2,859 in FY21 to $3,315 in FY22 – an increase of 16%.
Ongoing advice fees charged by advisers on a per advice document basis rose by 33% increase, from $3,656 to $4,865 over the same period.
Mental health
In a survey of almost 700 advisers by Philippa Hunt and Forte Asset Solutions, the majority (95%) said stress levels had slightly or significantly increased since the Hayne Royal Commission. Over 70% said their physical health had significantly or slightly declined while 87% said the same about their mental health.
Over two thirds of advisers reported sleep struggles and over half said they were drinking to cope. Some 10% turned to non-medicated drugs, primarily sleeping tablets.
To address this, a third (37%) of advisers had consulted a doctor while 18% were prescribed medication. 7% of advisers said they had contacted support networks like Beyond Blue or Lifeline for assistance.
Consumer demand
2021 saw the number of advised Australians drop below two million, as per the Adviser Ratings (AR) 2022 Australian Financial Adviser Landscape report. The largest cohorts opting out of advice were between the 35-44 and 45-54 age brackets.
Still, demand for advice was on the rise with 5.6 million Australians looking to seek help from a financial adviser. The age bracket with the highest number of advised consumers was 65+ years (590,000) followed by 55-64 years (530,000) and 45-54 years (390,000). The lowest numbers were observed in the 35-44 age brackets (260,000) and 21-34 (140,000).
Services sought by under-65s were ways to invest their money, growing and managing wealth and planning for retirement, research by the Financial Planning Association of Australia (FPA) indicated. Meanwhile older consumers wanted help on aged care issues and maximising aged pension entitlements.
