About 5000 advisers will exit the financial advice industry over the next two years to stem their declining mental health resulting from a burden of paperwork and tougher education standards since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2017.
This is the prediction of Artemis Investments (NSW) director Philippa Hunt, who with Forte Asset Management founder and director Steve Prendeville, surveyed 700 advisers last year to find more than half (54%) had experienced “significantly declined” mental health in response to new compliance rules.
Hunt said advisers, their staff and clients were all impacted by new rules such as fee consent forms and associated design and distribution obligations (DDO) regulations which had made small business operators struggle to survive.
About 84 per cent of respondents said Financial Adviser Standards and Ethics Authority (FASEA) requirements added to stress but the difficult exam was the main causes, particularly with staying and exiting advisers, business owners and men with more than 25 years’ experience, the survey showed.
Hunt said the industry had seen a departure of 11,000 advisers, from 28,000 to 17,000, in the past two years with business survival rates higher for those with high net worth clients.
Advice becomes elite service
“The feeling is we’ll end up with about 13,000 (advisers) around the country, which makes it an elite service,’’ Hunt said ahead of her presentation at the Self Managed Superannuation Fund (SFSF) Technical Summit in the Gold Coast this week.
“If we manage to get the current legislation amended to ameliorate the worst of the effects of it; to take the pressure off the amount of paperwork that we’ve got to do, then we’ve got some hope of retaining advisers because they can let staff go that have to chase forms and signatures or employ them looking after clients and other aspects of their business,’’ Hunt said.
Financial Services Minister Stephen Jones has promised to amend qualification hurdles in response to strong criticism by the industry and had previously noted a poorly managed “tsunami” of regulatory changes as the reason for a mass adviser exodus.
He said in May, a Labor government would not require advisers with 10 years of experience and an unblemished record to complete a university degree to practice.
Industry health check
Continuing to take the pulse of the industry, Hunt aims to run a post-test survey in a year’s time to see if adviser mental health improves with regulation adjustments.
“If we are dealing with the stressors, and we remove some of the stress, does the mental health improve? And can we measure it using the same yardstick in 12 months’ time and compare?’’ Hunt said.
“People are working 80-hour weeks, they don’t see their families, they don’t see their kids, they’re exhausted on weekends. They’re not getting exercise their diets lousy guys in their 40s and taking up smoking.
“We’ve got online gambling, online activities, alcohol, drug taking prescription drugs, because they need help from their GPs and if you try to get an a psychologist, you’re waiting three and four months.
“We decided the easiest course would be to redress the legislative effects and take the burden of the paperwork out of the system.”
The survey is targeted at all financial advisers, including those in insurance and investment, as well as staff who work with and for advisers.
If you are suffering from depression, anxiety or suicidal thoughts, or you’re worried about someone else and feel that urgent professional support is needed, contact your local doctor or one of the 24/7 crisis agencies below: