Mercedes

ComplianceSMSF Strategies

Financial advisers hunkering down

3 Nov 2021 6 month(s) ago

A distinctly defensive mood is evident in the financial adviser community.

Financial advisers are staying put and there is still a number leaving the industry because of stricter government requirements. Ardata’s Adviser Musical Chairs Report has found that in “a destabilising Q3 for locked-down Sydney and Melbourne, most advisers hit pause on musical chairs.”

Financial advisers saw little reason to look for greener pastures, it seems.

“There was little movement  between businesses and licensees, which was  not surprising given the two largest states were  confined to work-from-home arrangements; advisers were largely unable to audition for new  prospective homes.  

“It was a stark contrast to the previous quarter  (Q2, 2021), during which almost 1,500 advisers  departed. As we said at the time, the end of financial year is a popular time to exit for advisers who wish to beat the ASIC levy and often insurance renewals, too. In contrast, Q3 has historically been a quieter quarter for  industry departures, and was again this year with only 505 advisers leaving the sector (net  loss of 215).”

Here is an industry overview:

Ardata says the adviser workforce has now dropped below the 19,000 mark, which is getting closer to the  number of advisers who had sat the Financial Adviser Standards and Ethics Authority  (FASEA) exam by September (19,000). The government’s crack down is having its effect:

“Around  9-in-10 – or 16,850 – have now passed their  exam, the authority states. Nevertheless, only 14,630 out of those were recorded as active financial advisers on ASIC FAR at that  time. As our special feature shows, trends are beginning to emerge around the types of  advisers who are choosing to depart.”

Ardata found that the  compliance burden remains a top concern, along with the cost of both sustaining and  building profitability.

“In a small sign of optimism, the quarter had the highest volume of market entrants in more than two years, with 75 new advisers joining. However, this will do little to compensate for the continued departures. Although Q3 was the quietest quarter for departures in more than two  years, the rate of adviser exits was almost seven  times higher than new entries. This matches the trend of the past few quarters, albeit at a slightly  less pronounced rate.”

Here are the numbers per segment. The biggest number is now privately ownd companies with 1-10 advisers, while the number of bank advisers has plummetted:

 

 

Reader note: This is general reporting only and should not be considered in any way to be investment or tax advice. It does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. For more information please read our disclosure statement.

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