In the past five years, the financial advice workforce has taken a nosedive, with more than 40 per cent of advisers leaving the profession. While most former advisers have gone on to new careers or retirement, some of them have come back to the fold.
In other words, some advisers who are removed from the Australian Securities and Investments Commission’s (ASIC’s) Financial Advisers Register (FAR) return – usually hundreds of days later.
Given these returning advisers can help offset some of the industry’s losses, we thought it was worth analysing how many are coming back – and where they are going when they return.
Welcome back
Since this time last year, more than 1100 advisers have come back onto the FAR after being removed for more than a week.
Over the 2021-22 financial year, an average of 94 advisers returned every month. Over the last three months – including the July projection – numbers have narrowly beaten that benchmark.
Figure 1 – Adviser returns in past 12 months/Average time away before returning
Source: Adviser Ratings. Note. July ’22 figures are projected.
Stockbrokers and boutiques gain
When compared with the rest of the adviser universe, a disproportionate number of returning advisers are ending up at stockbrokers and boutique privately-owned licensees,.
On average, 12 per cent of returned advisers in 2021-22 ended up at stockbrokers; only 8 per cent of other advisers are licensed in this segment. Similarly, 25 per cent of returning advisers went to the popular small (1-10 advisers), privately-owned licensee segment, which licenses 23 per cent of the rest of the market.
Unsurprisingly, the diminishing limited licensee segment hasn’t had any returnees, while banks had just 16 in total across the year.
Figure 2 – Returning advisers by licensee type
Source: Adviser Ratings. Note. July ’22 data is a projection.
Is the tide turning?
At this stage, the volume of returning advisers still falls well short of those who are departing for good. In the first six months of the year, industry exits outstripped returns by a ratio of three to one. Between January and June, the industry lost more than 1800 advisers. And we’ve said we expect to see more departures later this year, when the final deadline for the exam arrives for advisers who have twice failed.
Having said that, advisers are taking an average of 270 days to return to the industry, so we may see an uplift in returnee numbers later this year.
We’re also seeing signs of the exit rate slowing, along with a slight improvement in the number of new graduates entering the profession. All of these signs are positive, even if they’re not pronounced yet. The turnaround point may not be too far away.
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