Dougal Guild

Some one in four advisers expect to leave the industry within the next five years, according to research from Investment Trends

The firm’s 2022 Adviser Business Model Report didn’t measure the exact reasons why they intend to leave but implied that compliance and regulator issues is the biggest concern.

Investment Trends research director Dougal Guild tells Professional Planner roughly 25 per cent of the group that claimed they were leaving are near retirement age.

“Whenever we talk about advisers leaving the industry, there’s always an element of those advisers that are reaching retirement age,” Guild says.

Earlier this year, the Investment Trend Adviser Technology Needs Report found compliance burden was the biggest challenge advisers faced, an issue Quality of Advice Review lead Michelle has sought to address.

“We do know the regulatory environment more broadly and compliance considerations associated with that consistently come up as the main challenges advisers face in their practices and has been that way for many years now,” Guild says.

Guild says the education standard has receded when it comes to the biggest issue advisers face and he expects the experience pathway proposed by financial services minister Stephen Jones may further impact that.

However, despite the regulatory burden and increased industry attrition, practice profitability has increased, with 46 per cent of financial advisers saying they were more profitable this year, compared to 34 per cent in 2021.

The total cost of providing full advice to the client has increased from $2,850 in 2020 to $3,280 in 2022.

The move to self-licensing

The report found the move to self-licensing has slowed over the past year as advisers begin to weigh up the benefits with the additional costs and compliance challenges associated with this model.

According to Investment Trends, the proportion of self-licenced advisers across the industry has increased from 17 per cent in 2017 to 35 per cent in 2021 with a slight decline to 31 per cent in 2022.

In the next 12 months, 37 per cent are expected to leave their licensee of which 70 per cent stated they would go self-licensed.

Guild says there was a slight levelling out in licensee switching during the past 12 months, but expects this will increase in the near future.