Australia recorded one of its largest ever declines in adviser numbers in the week to June 30, with 549 (net) taken off ASIC’s financial adviser register in what is historically the most common period for adviser exits.

There are now 19,082 financial advisers on ASIC’s registry.

According researcher Wealthdata, Q2 (leading into June 30) has been the most frequent time for advisers to leave the industry since tracking started in 2016. While originally linked to the end of financial year, since 2017 the trend has been exacerbated by the ASIC adviser levy which charges licensees based on adviser numbers at July 1.

The previous adviser levy for FY19/20 came in at $1500 per licensee plus $2,426 per adviser – an increase of 160 per cent in two years.

Wealthdata chief executive Colin Williams says the cluster around June 30 can be equally attributed to the appropriateness of finishing at the end of the financial year and a desire to avoid the industry levy. “It’s just a smart time to do it,” he says.

Despite the gaudy numbers, the 549 advisers that left in the final week of the financial year doesn’t represent the largest weekly decline for advisers. In June 2020 there was a net loss of 872 advisers and in 2019 the list went down by 581.

Advisers are still leaving, Williams says, but there are simply less of them to go now.

“If you go back to the end of 2018 we had 28,000 advisers, whereas now we’re just over 19,000. So when you go to 2019 and look at that amount, proportionately it’s about the same each year.”

The entire Q2 period generally sees a significant outflow of advisers, he says. “The next quarter sometimes gives a bit of a bounce but it’s a dead cat bounce at best.”

Williams adds a note of caution to the numbers provided: “For some advisers, it may have been convenient to end on June 30 and start with a new licensee on July 1, but the July 1 start has not been captured in the data,” he says. “The next couple of weeks’ data will be interesting to follow.”

Ready to jump

The reasons behind the adviser exodus have been well documented. Since the Hayne royal commission, advice has been mired in overweight regulation, reputational issues, the loss of revenue streams, a dearth of talent and tough educational standards.

A deeper look at the type of advisers that left in June shows the educational standards may be playing an outsized role in the retreat. The largest decline by far, with 91 advisers gone for the week, was from the NTAA, which runs the SMSF Advisers Network. Most of these are accountants providing SMSF advice under the limited licence provision – advisers ill-suited to education requirements designed for holistic financial planners.

“It’s tough for accountants to answer questions about life insurance,” Williams comments. “If you’re a holistic financial planner the exam is a lot easier.”