Despite widespread reports that financial adviser are exiting the industry in droves, Australia’s population of true financial planners has actually held steady over the past decade according to researcher Investment Trends.
While most accounts hold forth that adviser numbers have sunk 15 per cent from 27,329 in 2019 to 23,173 in 2020, Investment Trends research director Recep Peker points out that the 2019 figure was artificially inflated by adviser flocking to get themselves on ASIC’s financial adviser register in order to avoid doing FASEA’s professional year.
The rush of advisers onto the FAR in late 2018 bumped the numbers up by 10 per cent, Peker explains, so the 15 per cent drop is closer to a five per cent decline.
Despite the headwinds the industry is facing , Investment Trends believes the adviser cohort is actually showing tremendous resilience and will lose slightly less advisers in the next few years.
“Looking forward, industry attrition will not be seismic, with only 4 per cent of financial planners intending to stop providing advice in the year ahead, and a further 3 per cent in the year after,” the researcher said its recent 2020 Planner Business Model report.
“Financial planners remain resilient against a shifting regulatory landscape, disruptions from major players entering and leaving the wealth management space, and the recent pandemic-induced market volatility,” Peker said.
Moreover, Peker explains to Professional Planner, the true number of advisers in the country has remained steady at around 17,500 for “the last decade or so”. By cross checking data on ASIC’s FAR and eliminating stockbrokers, accountants operating on limited licenses and time share ‘advisers’ from the list, the researcher says they can see the number of true, holistic financial advisers has remained at about 17,500 since 2010.
Investment Trends’ 2020 Planner Business Model report is based on an in-depth study of 693 financial planners and concluded in May 2020.
Peker reveals that while advisers firmly believe the headwinds will cause others to leave the industry, “only two or three per cent said they themselves would leave”.
Australia is proving more resilient than our UK counterparts, the research notes, with the retail distribution review forcing a lot more advisers out of the UK industry.
“Similar regulatory challenges have impacted the UK advice market in the past decade, reducing their planner headcount by 20 further, further highlighting the strength of Australian advice industry,” the research states.