Australia will need over 1,000 new advisers per year to meet retirement needs

Speaking on a recent episode of the Wicked Problems, Visionary Investors Program — founded by Evolution Media Group, ausbiz and Adviser Ratings — Financial Planning Association (FPA) CEO Sarah Abood said that accessibility and affordability issue will intensify as more Australians enter retirement.

“By 2026, according to the ABS, we’re going to have 137,000 Australians every year turning 65. So that’s not the only trigger for advice, but it’s one of them and you would need 1,100 new advisers give or take, every year, just to serve the new demand that’s coming online every year,” Ms Abood said.

“Right now, we don’t have very many advisers and planners. In fact, the numbers have halved in the last couple of years,” the CEO reiterated.

Since 2019, the number of advisers has plummeted from nearly 30,000 to under 16,000 today.

“Things are going in the wrong direction. Demand is going up, supply is going down,” Ms Abood said.

And although bodies like the FPA are working on replenishing the industry, Ms Abood stressed “it takes a while to grow a new financial planner”.

“Those education standards are high … so it’s not something you can just get tomorrow,” she said.

Touching on whether superannuation funds could become the natural owners of financial advice in the near future, Ms Abood said she doesn’t believe so.

Instead, she said that she sees “these organisations needing to work very closely with advisers”.

“I’m not sure that there’s a natural owner of advice, because financial planners and advisers are professionals and there is no reason why we wouldn’t be evolving in the same sorts of firms existing in say the legal profession [or] the accountancy profession, where advisers are coming together and creating their own firms and partnerships,” Ms Abood said.

“And in fact, that form of advice is probably the fastest growing right now. Advisers are heading out and licensing themselves. I see that accelerating already and I think that will continue.”

The CEO also spoke about the Quality of Advice Review (QAR), flagging its “critical” importance especially when it comes to creating more favourable conditions to encourage more digital providers to enter the space and alleviate the stresses placed on advisers.

“By implementing some of the early recommendations that have come out of this review, I think it does offer a great potential to give some more confidence to the digital advice providers to build more tools that can do more for consumers, and I think that helps planners a great deal as well,” Ms Abood said.

Joining Ms Abood on the program, Midwinter’s CCO, Steve Davison, stressed that firms need to feel confident to invest in technology.

“Leaning on the proposed changes in the Quality of Advice Review and Midwinter’s digital advice capabilities, we are on a mission to change this by providing advisers with the technology they need to provide affordable advice solutions,” Mr Davison concluded.

Last month, Midwinter flagged concerns with a key recommendation in the QAR proposal paper.

The QAR proposal paper suggests removing the requirement for statements of advice (SOAs) to allow the profession to provide financial advice in a way that suits their customers. However, in an emailed statement to ifa, Mr Davison, argued that customers will still want — and need — to be provided with an artefact.

The FPA backed the removal of SOA in its own submission, but noted that it should be replaced by a record of the advice provided to the client on request.