Financial adviser salaries have increased in real terms over the past two decades but it’s a different story when factoring in inflation, according to a recruiter.
The latest Adviser Ratings Advice Landscape Report found advisers were making more money than ever, but industry recruitment firm Recruit 2 Advice released figures revealing that financial adviser salaries have had an annual increase of 1.9 per cent since the year 2000, less than the annual inflation rate of 2.8 per cent.
In 2000, the average adviser salary was $110,000 which has risen to $165,000, but based on inflation it should be around $207,000, leaving a gap of $47,000 – a 20 per cent difference.
Careers such as paraplanners and school teachers have been less affected by inflation, despite having much lower salaries. Paraplanners have had a 2.6 per cent annual increase since the year 2000 while teachers in New South Wales saw an annual increase of 3 per cent.
However, R2A principal Dugald Braithwaite says all these figures are dwarfed by Sydney real estate which has seen a 7 per cent annual increase over the past 25 years.
Braithwaite tells Professional Planner that raising adviser salaries to keep up with inflation would take advice further out of reach of average ordinary Australians.
“The impact would be that advice would be less accessible to the masses,” Braithwaite says.
In 2021, following the Covid-19 pandemic, recruiters reported 5 per cent growth in adviser salaries over the proceeding six months with top end talent making $180,000 to $200,000.
Although by May 2022 research from CoreData showed half of adviser salaries stagnated or decreased.
Principal’s Community managing director Kon Costas recently cautioned advisers to manage expectations around significant salary increases, namechecking a report from recruitment agency Robert Walters that stated pay for advice roles have increased 37 per cent over the last year in NSW, despite his own internal data showing the average adviser salary increase in NSW was 4.5 per cent.
But Braithwaite expresses frustration regarding adviser salaries, given the work to professionalise the sector.
“Advisers now are more qualified and have had to work harder to be licensed as an adviser than they ever have in history,” Braithwaite says.
With practices already struggling to keep costs down amid rising licensee fees, regulatory charges, and tech and service provider costs, a significant increase in adviser salaries to close the gap to inflation would have a detrimental effect on many clients’ ability to afford an adviser.
“All we do is help rich people get richer, that’s not the objective of the government,” Braithwaite says, alluding to the Albanese government’s stated objective of reducing the cost of advice.
R2A found that recent reports indicated that in 2023, there were only 370 new entrants, nowhere near the thousand or so required to kickstart growth in the industry.
Braithwaite says 370 might be just enough to stabilise the numbers in the profession – which is 15,430 based on the most recent figures from Wealth Data – but it’s not going to provide any growth.
“You look at the benefits, remuneration salary for being an adviser, and it’s fallen behind inflation, that’s not attractive,” Braithwaite says.
To bolster the current talent pool, businesses are looking internationally. Braithwaite says his business is looking for advisers to move from overseas.
“I’m working with a number of groups looking at how we can actually entice English and British advisers to emigrate and come and work here. A lot of UK advisers have contacted me over the years.”