A Group of Advisers Bucks the Industry Trend

Our latest analysis of adviser movements has thrown up and interesting difference in the choice of licensees among advisers who are “switching” licensees, versus those “returning” to the industry. One of these groups is strongly biased towards moving to non-institutional (private) licensees, while the other, particularly those advisers with less experience, is more inclined to re-join licensees that are institutionally owned or aligned. Do they know something that other advisers don’t?

For clarity, a “switching” adviser is defined as an adviser who has moved from one licensee to another within 6 months. In contrast, a “returning” adviser is a previously authorised adviser who has joined a new licensee after being unlicensed for more than 6 months. Our analysis took into account over 700 switching and returning advisers who joined new licensees in Q2 this year.

Key Points:

1. All switching advisers prefer privately owned licensees as new homes
2. Returning advisers with LESS than 10 years’ experience prefer non-private licensees as the moving destination. 
3. Returning advisers with MORE than 10 years’ experience prefer privately owned licensees  as the moving destination. 

The well-established industry trend is that advisers are moving en-masse to privately owned licensees, indeed 80% of switching advisers moved to a privately-owned licensee in Q2.

In our analysis of adviser movements, we found that the trend of “switching” advisers moving to privately owned licensees had become even more pronounced. In Q1 these advisers chose a private licensee over an institutional one at a ratio of 2:1, in Q2 this rose to a ration of 4:1.

However, those advisers returning to the industry after more than 6 months of being unauthorised have bucked this trend and exhibit a small majority preference for institutionally owned or aligned licensees. On noting this difference, we decided to further segment the 2 groups of advisers by experience and the result was intriguing.

Among returning advisers, those with less than 10 years’ experience clearly prefer institutionally owned or aligned licensees.

When experience is taken into account for switching advisers, there is no corresponding change in preference towards institutionally owned or aligned licensees.

The question is then posed – “why do returning advisers, and particularly those with less experience prefer institutional licensees?”

It may be that more time out of the industry has allowed further introspection – an adviser needing to maintain AR status in order to ensure continuity of service to their clients may have different, more immediate concerns and focus.

It may be that returning advisers prefer larger institutions to smaller ones because they think that they will be a better option for their future career. Larger institutions might offer more substantial benefits and offer the perception of stability in this time of industry flux – notwithstanding the changes that have already swept many of the larger licensees up to this point in time.

It is an interesting question to answer, there are many who don’t think the big institutions will be particularly stable, safe places. If that is a perception driving some advisers, the reality may be the polar opposite given the intent to sell / break-up the CBA, MLC and potentially AMP behemoths.

Your thoughts and comments are welcome below.

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