As the end-of-financial-year frenzy subsides, marked by significant adviser movements as licensees frantically update ASIC's register, we now see a welcome stabilisation in adviser numbers. In fact, so far this financial year, the sector can celebrate a net increase of 134 advisers, matching the exact figure from this time last year and marking a steady trend.
In light of the usual end-of-year fluctuations, let's take a closer look at Australian financial adviser movements over recent years…
Following a period of significant contraction in the advice market, no secret due to enforced regulation, higher costs, and the professionalisation of advice- which saw many advisers leaving the industry in recent years- we are now witnessing encouraging signs of stabilisation in adviser numbers, even though they remain low. The advisers who have stayed in the industry are expanding their client base, utilising technology and outsourcing to handle the increased workload more effectively.
As shown in figure 1 below, the rapid decline in the number of financial advisers since the Hayne Royal Commission has begun to slow in recent years. After falling below 16,000 for the first time in 2022, the total number of advisers in the market edged down by just 1% to 15,623 in 2023, providing further evidence of stabilisation.
Figure 1: Number of advisers in the market
Source: Adviser Ratings' 2024 Australian Financial Advice Landscape Report
The rapid exodus of financial advisers from 2019 to 2021, driven by increased compliance and training requirements, has dramatically slowed. Figure 2 shows a peak of 5,099 ceased advisers in 2019, but this number dropped to 1,603 in 2022. Meanwhile, new advisers entering the sector increased slightly in 2023 to 386, indicating green shoots of market recovery as shown in figure 2 below:
Figure 2: Adviser movement history
Source: Adviser Ratings' 2024 Australian Financial Advice Landscape Report
However, there is still much room for improvement in bringing fresh talent into the sector. The average years’ experience of advisers has risen in 2023 due to the slow pace of new advisers entering the market. Figure 3 shows that 35% of advisers have 10-19 years of experience, and 27% have 20-29 years. Although 6% have just 1-4 years.
Figure 3: Current advisers’ years of experience distribution
Source: Adviser Ratings' 2024 Australian Financial Advice Landscape Report
Promisingly, the proportion of advisers that decided to leave the industry has fallen to 7% from 10% in 2022, while those planning to stay have increased from 78% to 85%. The remaining advisers are uncertain about their future in the industry. With greater clarity about the profession's future and most advisers completing their education requirements, figure 4 below shows the vast majority of the current cohort are committed to staying, helping the industry on a path towards a more stable and experienced adviser base.
Figure 4: Adviser intentions regarding leaving the industry
Source: Adviser Ratings' 2024 Australian Financial Advice Landscape Report
Article by:
Comments1
"The numbers don't show non-advice advisers. ie CEO's, fund managers or compliance managers etc etc. the FAR register it seems does not differentiate between an adviser that provides advice and one that does NOT. eg our AFSL managing director does not provide nor gives advice to a retail client and has not done in years. this will then show up the true number of financial advisers in the industry and the urgency that the laws must change now to keep more of us going just a few more years."
Roland Knight 15:46 on 25 Jul 24