The average financial adviser in Australia is a 45-year old male that has 13 years of experience in the role and lives in Melbourne, according to the Financial Planning Association’s chief executive Dante De Gori.
Speaking at a Pritchitt Partners event in Melbourne, De Gori brought together data from the FPA’s own database and other sources to paint a picture of the advice industry today, before outlining what he believed the industry would look like in 2030.
The typical adviser currently earns $125,000 per year and works in a practice with less than ten financial planners, De Gori revealed. They charge $2400 for a piece of advice and have a degree related to their profession, he said.
“As of 30 June 2019, there are 26,100 individuals registered on ASIC’s Financial Adviser Register. This number has increased by about 45 per cent since the Ripoll inquiry in 2009,” De Gori said, before noting that there were almost 30,000 registered in December last year – an anomaly caused by transitional arrangements to meet the Financial Adviser Standards and Education Authority’s mandate.
The FPA boss also drew on data from the Productivity Commission, pointing to its estimation that the financial advice sector is worth $4.6 billion, and from research from Investment Trends, to point out that while 48 per cent of Australians have an advice need, only 2.6 million consumers received financial advice in the last year.
De Gori covered a host of issues pertaining to advice, including the role of the media, the need to separate product from advice, the growth of advice-tech, and quirks in regulation that see time-share advisers licensed under the same umbrella as financial advisers – an area he said he believed needed to be reviewed.
Ultimately, De Gori moved onto the future of advice and where he sees the industry in 2030, when the Australian population “ticks over 30 million” and the superannuation guarantee is “finally at 12 and a half per cent”.
De Gori predicted there will be 7 million Australians with a financial planner in 2030, “when driverless cars are mainstream”. By then the industry will be recognised as a profession and financial advice fees will be fully deductible, he added.
“General advice has been removed,” he postulated. “Product advice has been replaced by financial advice. There will be truth in labelling and consumers will know when they are getting advice and when they are being sold product.”
De Gori dwelled on product, saying that product providers “and other gatekeepers in the value chain” will be accountable for their role in any failures that cause consumer detriment. He also theorised that advice will trend towards specialisation, including in new and emerging areas such as divorce.
Adviser numbers will drop to under 20,000 before rebounding back to 25,000 by 2030, he said.
The impact of technology will be significant, De Gori noted, with plans accessible digitally and updated in real time as the client spends.
“There will be no more ongoing fee arrangements as we know them today, being for services promised to be delivered. Instead there will be invoices for services actually delivered.”
De Gori concluded that while financial planning has a great future, “it will be different.”
“Those who take the challenges as opportunities will thrive, and so too will the profession.”