Practicing Australian financial advisers have dropped from 26,500 to 16,671 since 2019, new data from Rainmaker Information has revealed.
Prior to the requirement that all advisers needed to be registered on the ASIC Financial Adviser Register (FAR) by 1 January 2019, numbers spiked with an 8,500 increase between 2015 and 2019.
Since then, the number of advisers has suffered an aggregate fall of 9,860, equating to a 38 per cent drop in the last three years, Rainmaker reported.
“The number of registered financial advisers is now back to where it was even before the adviser registration system was introduced,” said Alex Dunnin, executive director of research at Rainmaker Information.
While the research reveals that Australia could run out of financial advisers in five years if the declining rate goes unchecked, it also offers a more optimistic scenario that follows the long-run trend, but ignores the 2015–2022 “boom-then-bust” period.
This best-case scenario points to an adviser base of around 12,000 advisers in 20 years’ time.
Another scenario mapped by Rainmaker forecasts a more controlled decline — a fall of 5 per cent per annum — which would mean Australia could see a thin 6,000 financial advisers practicing in June 2042.
“While these are predictions at this stage, they serve a purpose; they reinforce that the current trend of advice industry exits is so baked-in that it is naïve to expect a recovery in financial adviser numbers anytime soon,” said Mr Dunnin.
According to him, the collapse in financial adviser numbers has, counterintuitively, not been caused by the failure of its core markets of retail superannuation and platforms.
“The forces of disintermediation and divestment away from the advice sector by wealth managers has combined to impact not only the volume of funds under management (FUM) they serve, but its need for financial advisers,” Mr Dunnin said.
“While new FUM vectors in managed accounts and ETFs are growing rapidly, its volumes are only minor in market-wide terms,” he explained.
The irony, Mr Dunnin noted, is that while financial advisers are now “strategically less important”, the successful remaining ones are “now much more important because in a wealth management market that is violently disrupting, funds managers need effective financial advisers more than ever.”
How is ASIC going to be able to operate when the are no advisers left to pay a levy / provide an open cheque book?
Plenty of advisers are playing the short game. They’ll move on into other industries. I witnessed it in 2009 when super funds were given a carve out 1.0. Come 2023 when super funds are given an even bigger carve out 2.0, it will cause some advisers to consider there are other careers to make easier money in. But that means a better time for those left standing.
The gap left by “independent” advisers will be filled by operators at call centres. Just give them the right script and they’ll talk anyone into handing over hard-earned wealth.