There’s been no shortage of predictions floating around about the number of financial advisers leaving the industry following a difficult year and in light of new education hurdles.
A 50 per cent exodus of advisers from the industry is difficult to fathom, but it’s certainly not out of the question, according to the predictions some business leaders in wealth management.
A 20 per cent to 30 per cent exodus of the 25,000 or so authorised representatives currently on ASIC’s register is the more common prediction that’s being bandied around, but even this more conservative estimation represents in excess of 7000 advisers potentially moving on to new pastures.
Indeed, the run has already started. Adviser Ratings released data in late July stating that 2850 advisers have left the industry this year.
For many, the new Financial Adviser Standards and Ethics Authority (FASEA) framework has arrived at a time when retirement is already on the cards, so now may seem as good a time as any for some advisers to pull up stumps.
In order to remain in the industry and to be eligible to give personal advice under the Australian financial services (AFS) licensing regime, advisers have until January 2021 to complete and pass an exam, which will for the first time test individuals on a new Code of Ethics among other technical advice-related topics.
Advisers who have been giving advice for 30 years or more may be feeling their experience has been devalued if the only way they can practice in their chosen career is to pass an entry-level exam – so goes the feedback from those close to advisers who are making these decisions today.
For others not already at retirement age, the bruising associated with going through a royal commission – both in terms of reputation and business valuation – may seem too challenging to bounce back from.
Change is hard. The prospect of not living a life not defined by the cycle of client meetings, portfolio reviews and statements of advice is one laced with unknowns. For some thinking of making the leap and going elsewhere, whether it be to avoid education standards or to chase a dream, the paths are being viewed with equal parts excitement and trepidation.
This is the first in a series of two articles Professional Planner will publish this week asking six individuals in total (today’s three contributions are below) to open up about the numerous conversations they’ve had with financial advisers in recent months relating to their future options and pathways.
FABIAN RUGGIERI Kaizen Recruitment / Senior Consultant
When an adviser comes in to us first and foremost I ask them why they’re looking to leave. The key things that come up are the education standards, increasing compliance, how hard it is to make a profit.
Their motives are important; if they’re leaving the industry because they can’t or won’t adapt then it doesn’t speak particularly well of them. I mean, if you’re not willing to adapt how are you going to adapt to a role that is different?
But if there is something else that they can be passionate about, something that they enjoy, it’s a different story.
We’re increasingly seeing advisers looking for the BDM – type roles. The smaller fund managers generally need someone who already have an established network and can hit the ground running, but the bigger ones are more inclined to take on an adviser because they have established clients and networks and can more easily plug an adviser in. If you can get your foot in the door a median BDM salary is between $150,000 and $180,000 plus bonus, so it can be lucrative.
I’ve also seen a number of people looking at alternative options including remediation and compliance. Quite a lot of experienced advisers move into big four consulting firms to take up those offers. There’s also been an increase in demand for complaints resolutions and there has been a lot of roles going in that area of in the last 12 months.
Demand for advisers who have worked outside of the super funds to come in and join, say, an industry fund environment is also more common now.
SUE VISKOVIC Elixir Consulting / Managing Director
When I talk to advisers considering their next move, I drill into them the importance of vision and purpose – I ask them why they got into the industry in the first place, and whether they’ve achieved what they set out to do in advice. For many advisers they actually have achieved what they set out to achieve, and for those leaving that can provide some nice closure. For those who haven’t achieved what they set out to achieve then it’s a good process to reconnect with that vision.
A lot of the time advisers tell me they came to advice because they love helping people. If they’re a business owner then they’re likely to have a lot of obvious skills that they can take elsewhere. For those who are client facing advisers, life coaching and financial coaching is an avenue because it
doesn’t come under the definition of financial advice. I know financial advisers quite often end up helping people at what can end up being the
most difficult time in a person’s life and a career in counselling can be a natural extension.
Advisers are also really good at talking on their feet and purveying information; educational seminars, connecting people with their superannuation, working with employers and in particular with women, empowering people to reconnect with their money, setting up budgets and the like. I have definitely met with financial advice practices that could benefit from having a person in a client acquisition or a business development role with those kinds of skills.
PETER ORNSBY RI Advice / CEO
We’ve been in discussions with advisers for some time now, and overall I’d say that the general consensus is that new education standards are a positive thing for the industry and for the profession. None of the advisers I’ve had conversations with have suggested there’s a desire
to find a different profession.
Those advisers who are of a certain age and are ready to retire but still want to be associated with advice in some way are telling me they plan to hang on as a director or work in an advisory capacity.
Advisers within our network essentially fall into one of two categories – the first category is older advisers in the 65 year or older age group planning to retire.
Those who are thinking of retiring or are close to doing so, most of them will continue to keep a hand in their practice through a directorship, ownership as well as a coaching role. We’ve had a lot of advisers decide that they want to take on a coaching and mentoring role, so they’ll be involved in the training of the younger planners. A lot of these advisers are expressing interest in training to help them learn how to pass on what they know to the next generation. They want to evolve their skills from what they have learned as practitioners and business owners to being leaders that can teach that.
Those in the 65-year age range are also talking about taking a director or ownership role and then subsequently retiring. The other category – everyone else in the business – they’re almost without exception planning to go on and do the higher education requirements because they see merit in moving towards a profession. We’ve been having these discussions for a while now and all the advisers we’ve spoken to that aren’t at retirement age are already moving forward with the profession.