Australia isn’t the only country suffering from a financial adviser shortage, with both the UK and the US reporting low numbers of advisers and a growing demand for advice. All three countries have launched initiatives focused around attracting more talent to the sector.
The latest research from WealthData shows there have been 90 new entrants to the ASIC Financial Adviser Register this year, bringing the overall total of 15,571 registered advisers in Australia. The number of provisional advisers – those undertaking their professional year – currently sits at 444.
Australia’s drop in adviser numbers since the Hayne royal commission has been well documented, when the FAR listed around 28,000 advisers at the start of 2019 in the weeks before the commission’s final report was released.
The UK has implemented a range of initiatives to promote financial planning for both future advisers and consumers via the Chartered Institute for Securities and Investment, the country’s peak body for financial advisers.
CISI works with associations including the Financial Advice Association Australia and is focused on encouraging people to become financial planners and boost adviser numbers.
A spokesperson for CISI told Professional Planner that attracting new talent to the financial planning profession remains a priority for CISI.
“We have a range of initiatives to promote financial planning through our university partnerships, which currently stand at over 60, as well as through a number of employability collaborations,” the spokesperson said.
This is a more positive outlook on the UK’s adviser shortages than a year ago, when CISI head of financial planning policy and engagement Chris Morris said there was a clear advice gap in the UK.
The UK’s Retail Distribution Review, which introduced higher education standards and banned commissions – similar to the 2012 FOFA reforms in Australia – reportedly had a negative impact on the country’s advice industry, leading to the departure of many advisers.
Heavy regulation has affected the UK advice sector, such as the introduction of The Consumer Duty which required firms to act to deliver “good outcomes” for retail consumers.
Similarly to the FAAA, the CISI has to find a good balance advocating for the advice industry while ensuring the firms meet high professional standards.
The CISI spokesperson said they are equally focused on making advice more accessible to consumers, particularly those “who may not need a full financial planning service but would benefit from financial guidance”.
“The Financial Conduct Authority are currently consulting on ‘The Advice Guidance Boundary Review’, which looks at how firms could give consumers within specific groups and with similar characteristics ‘targeted support,” the spokesperson said.
“Whilst the findings from the FCA consultation are yet to be confirmed, it is a positive step to make financial planning and advice more accessible to more people.”
The US is also experiencing a financial adviser shortage due to the profession being unable to keep up with the growing demand for advice.
According to a McKinsey report titled ‘The looming advisor shortage in US wealth management’, the advice profession has grown “at a meagre” 0.3 per cent per year in the last ten years. At the same time, the number of investors seeking holistic advice grew from 29 per cent in 2018 to 52 per cent in 2023.
“Addressing this gap requires…attracting new talent to the industry significantly faster than before,” the report said.
The US’ current answer to the growing demand is to increase productivity to enable advisers to serve more clients.
The McKinsey report predicted by 2034, at current adviser productivity levels, the adviser workforce will decline to the point where the industry faces a shortage of roughly 100,000 advisers.
Similarly to Australia, very few American universities and schools promote financial planning as a possible career to students. The Australian advice industry saw three universities pull the plug on their financial planning course last December due to a lack of student interest.
“Only a few large wealth management firms pursue on-campus recruiting, structured internships and rotational programs to attract top talent,” the report said.
“Partially as a result, financial adviser does not seem to be a top-of-mind profession for most students.”
Both the US and Australia have launched initiatives intended to encourage students to consider financial planning as a career.
Outgoing Minister for Financial Services Stephen Jones, in one of his last acts as Minister before the Federal Election, proposed major changes to the education pathway aimed at making it easier to attract new entrants into financial advice.
At the Professional Planner Advice Policy Summit in Canberra, Jones proposed removing the requirement to obtain a specialised financial planning degree and instead allowing future entrants to hold a bachelor’s degree or higher in any relevant discipline.
The McKinsey report noted that in the US, the CFP Board launched a campaign aimed at promoting financial planning careers to high school and college-age students in September 2024.
“Wealth management firms should also not shy away from hiring junior advisers exiting one of the major adviser development programs,” the report said.
