The industry has now dipped below 16,000 advisers on the ASIC Financial Adviser Register with the fallout of the adviser exam deadline being felt.
Advisers who qualified for the September adviser exam extension had three extra attempts during 2022 to pass the exam, but it was expected many were using the time to prolong their stay in the industry.
“It’s not surprising,” Wealth Data director Colin Williams tells Professional Planner. “We were all predicting it was going to come under 16,000 during this year. Particularly after the FASEA exam results came through.”
There was a net loss of 444 advisers over the last fortnight which comprised 295 this week and 149 for the previous week, bringing the total of registered advisers on the FAR to 15,908.
“It’s a lot over two weeks,” Williams says. “When they announced advisers could get an extension, it’s fair to say they probably gamed the opportunity. It gave them a nine-month extension to sort out what to do with their book.”
Williams says the extension presented an opportunity for those advisers to sort out succession planning for their businesses or where to offload their client books.
“If you look at the actual numbers that have fallen off, I’d be surprised if too many tried the exam or tried that hard,” Williams says.
ASIC presented evidence to a Parliamentary Committee in February suggesting 882 advisers on the FAR had not passed the exam, but Williams believed it was greater than that.
“I was of the view there was about 1,400 advisers who failed the exam twice. I suspect there will be more next week.
Licensees have 30 days to report changes to the status of an adviser on the FAR.
“Some have reported early, but we’ve had public holidays, school holidays,” Williams says. “The big licensees tend to be good at reporting and the smaller ones slower and take the whole 30 days.”
The FAR’s zenith was before the end of the Hayne Royal Commission when it had 27,929 advisers at the start of the year.
The large majority of departing advisers did so during 2019 and 2020. At the end of FY19 the FAR had dropped to 25,235 and reached 21,697 the following year.
“What happened in 2019 was the banks started offloading [advisers],” Williams says. “That was before the FASEA exam started.”
The industry reached 20,000 advisers in May and the end of the 2021 financial year left the industry with 19,082 advisers.
That dropped below 19,000 in October and remained steady with the FASEA exam deadline approaching at the end of the year.
Adviser numbers dipped below 18,000 thousand in January before the deadline to come off the FAR was completed.
The 17,000 threshold was breached in May after ASIC’s call out to lagging self-licenced advisers that had not updated their registry details. Over 2,500 advisers had departed the industry in financial year 2022.
Williams says the hardest advice sector for losses since 2019 is accounting/limited advice groups.
“These are the groups that have a restricted AFSL and offered advice around SMSF set up and ongoing management. Since 2019 they’re down 75 per cent.”