ANZ deal will weaken IOOF education levels

Matthew Smith


July 10, 2018

The education levels of advisers within IOOF’s dealer groups are above the industry average but will be watered down when ANZ’s aligned advisers join that network, new research shows.

The education mix among IOOF advisers within the group’s Consultium, Shadforth, Bridges, Lonsdale and Ord Minnett dealer group brands shows the average adviser education level is much higher than in the industry at large, research investment firm UBS conducted based on publicly available information shows.

ANZ’s aligned dealer group adviser education levels, meanwhile, are among the industry’s lowest, the UBS research shows, and will water down the average in the new entity.

IOOF made a $1 billion acquisition of ANZ’s aligned wealth business at the end of last year.

On average, advisers within ANZ’s FS Partners, Retire Invest, Millennium 3 and Elders FP need to do another 765 hours of study to comply with the proposed 2024 Financial Adviser Standards and Ethics Authority [FASEA] educational standards. That’s the most for any institutionally owned advice business in the industry, the UBS research shows.

Of course there is still a bit of ground to cover before the education framework is set in stone and UBS’s analysis doesn’t account for dispensation that might be given for professional qualifications and experience, both of which have been strongly suggested. The submission period for input on the FASEA proposals closed at the end of June.

Pro forma, IOOF’s acquisition of ANZ’s aligned dealer groups will push the diversified listed wealth management business from the third highest-ranking institutionally owned advice business for adviser education levels to eighth, with only AMP ranking lower (see Chart 1, below).

Chart 1. Average hours of study required per planner across major financial institutions

Source: UBS Equities

Shadforth, a licensee IOOF owns, has one of the best average study hours per planner in institutionally owned advice, the UBS study shows. Each Shadforth planner will need to complete 443 hours of study, on average, between now and 2024, to meet FASEA’s requirements. The industry average is 642 hours of study per adviser.

Chart 2. IOOF (IFL) Average study hours per planner

Source: UBS Equities

Meanwhile, advisers at Elders, an ANZ-owned dealer group recently sold to IOOF, will need an average of 867 hours of study to meet the requirements, the research shows.

Chart 3. ANZ average study hours per planner

Source: UBS Equities. ADGs represent the weighted average of ANZ’s dealer groups excluding the bank salaried ANZ Financial Planning channel

To arrive at its findings, UBS used the current qualifications of the approximately 25,000 advisers on the ASIC Financial Adviser Registry.

The Financial Planning Association is proposing a simplification of the proposed degree requirements. The FPA is also pushing for CFP-qualified advisers to have more of their continuing education recognised as part of the framework. Such changes would affect the analysis.

At least 25 per cent of the roughly 25,000 advisers in the industry today are likely to leave, given FASEA’s education requirements and the fact that the average adviser’s age is 55, the UBS report estimates.

“Whilst it’s difficult to predict how individuals will react to new educational standards, we believe at least 25 per cent of existing advisers could exit the industry over the next five years considering both educational time impost, average planner age (mid-50s) and rising revenue pressures as risk commissions reduce,” UBS equities analyst Kieren Chidgey states.

TOPICS:   ANZ Financial Planning,  education,  FASEA,  IOOF,  Shadforth Financial Group

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