Wealth management recruiters report high demand for both junior and senior advisers as supply dries up on both ends of the spectrum, which is nudging salaries up to around five per cent on levels seen in January.
Junior advisers are the ones benefitting most from the talent squeeze according to Perth-based recruiter Simon Burke, with minimum salary levels being pushed up to $100,000.
“The biggest gap is firms looking for young advisers, there’s just none coming through the system,” Burke says. “You used to pick up a planner on $70K to do some simple risk and super cases and they’d pay for themselves, then you could nurture them to grown from there. Those days are gone.”
Putting a junior through the professional year requirement is an expensive and time consuming process, he says. As there are no guarantees the adviser will stay with the firm, many firms are reluctant to invest in nurturing their own talent.
“Junior planners are huge investments for potentially no return, it’s often only the big organisations that can afford to do it.”
The banks’ collective exit from advice has come at the expense of breeding grounds for young advisers, says RIVA Recruitment’s Fabian Ruggieri, who estimates junior advisers are commanding salaries of between $95K and $100K.
“There are less opportunities to learn out there, and it takes longer to go from being a financial planning graduate to an adviser,” he says.
According to Simon Gvalda from Kaizen Recruitment, the demand for junior advisers is being matched by requests from advice firms for older, more experienced advisers.
“I’m seeing a lot of demand at the higher end of advisers with 10 to 15 years of experience,” he says. “Even moreso if they can bring across a decent book of clients.”
Firms are keen to plug the gaps left by the exodus of experienced advisers over the last three years, he explains. “I’ve seen significant salaries for the experienced advisers, at around or even above the $200K mark.”
$200,000 seems to be the top end of adviser remuneration according to the recruitment consultants. Even that level is a stretch for salaried advisers, Burke reckons. “Unless you’re a business owner you’re not making $200K, it tops out about $180K,” he says.
After a report from recruitment firm Robert Walters predicted a huge aggregate pay increase of 23 per cent for advisers in 2021, the progress has been muted according to the experts.
Most agree that an increase of around five per cent has come to pass, with the expected increases being balanced by a theme of conservatism during the pandemic.
“The salaries are quite steady,” Burke says. “There’s been an increase of about 5 per cent, but not more.”
Part of the reason increased demand hasn’t necessarily translated into significantly increased salaries is the lack of quality, affordable support staff, who Burke in February said were as rare as “pink unicorns”.
Without support staff, firms are reluctant to hire more advisers and push their compliance capabilities.
“Groups are saying they don’t want another adviser because it’s going to accelerate issues, they want support staff in compliance, service managers, people to make sure systems and processes are in place,” he says. “Sustainable businesses usually need two support people per planner, and if they bring in another planner it means you might not have enough support to cater for it.”
Support staff salaries have naturally increased, Burke adds, but some – like paraplanners – were already enjoying bloated salaries due to the compliance projects that emerged within the institutions in the wake of Hayne royal commission.
“Those projects have all wrapped up and a lot of firms are outsourcing,” Ruggieri says. “A career paraplanner is probably on an average of $85K to $90K.”