The industry has lost 319 advisers as the complete fall-out from the FASEA exam deadline has been felt, with the total number of advisers on ASIC’s financial adviser register settling at 17,282.
The deadline to complete the adviser exam was 31 December, 2021, and advisers who had not passed the exam had 30 days to come off the register.
A September 2021 extension granted eligibility to financial planners who failed the exam twice, with Wealth Data estimating 1,400 advisers being eligible.
Colin Williams, Wealth Data director, tells Professional Planner the number of advisers in the industry will stabilise as the remaining businesses start to grow.
“Numbers will still fall but those that fit into the holistic financial planning category [which is] the largest group will stabilise quite well now,” Williams says. “But accounting and limited advice is finished and as time goes on, will come to an end.”
The SMSF Adviser Network comprised the majority of lost roles, contributing 255 to this week’s numbers.
The post-Adviser exam deadline should be the last major drop-off of adviser numbers, after heavy losses in December because of the final FASEA exam and in July during the end of the last financial year.
The end of the 2021 financial year saw the departure of 549 advisers, which pulled the total number down to 19,082.
That loss was attributed to advisers wanting to avoid the increased adviser levy for the new financial year, which was in August frozen by the government at the level it was in the 2019 financial year level.
The estimated FY21 ASIC levy of $3,138 per adviser plus a flat fee of $1,500 was reduced to $1,142 with the $1,500 flat fee.
At the start of the year the numbers dropped to 17,670 as the industry saw 847 adviser departures during December and the first half of January.
Holistic Adviser Businesses will grow, as their numbers mean they can be choosy with which clients they want to take on and as that demographic will be higher earning clients who can afford to pay more for advice, those holistic Planning Businesses will do well.
As for the tens of millions of Australians who will not have an Adviser to guide them, that is another story.
Colin Williams states limited advice will come to an end and due to the maze of Regulatory complexity, grey areas around what is required for a ROA or SOA and the inherent risk due to no one being able to say I am 100% sure that my strategy won’t fall foul of the Regulators, it will continue to be high complexity, high fees and clients will still not read their reports due to the complex legal wording in their SOA’s that confuses them.
This brings me back to why the Advised Life Insurance sector is struggling, which has resulted in thousands of experienced risk specialists leaving the Industry, Holistic Advisers now starting to scope our Life Insurance advise, virtually NIL new entrants to the Insurance advice sector and premiums increasing to levels where Australians are saying enough is enough and we are going to cancel unless the premiums come down to affordable levels.
This fiasco was totally avoidable and in order to fix it, the Government MUST make it feasible for holistic and risk specialist Advisers to work in this sector again without the current barriers that has choked it off and hence, Insurance advice being scoped out in growing numbers.
The problem is clear to see. The solution is also clear to see.
What we need now is for the Government, the Regulators and the FPA (after reading the FPA comments about Adviser education requirements) to start listening.