Adviser numbers set to mourn more losses

After losing more than 12,000 advisers over four years, the industry needs to prepare for continued declines, according to Adviser Ratings.

As part of its annual Landscape Report, 11 per cent of advisers expressed their desire to leave, while 12 per cent were undecided.

Meanwhile, the remaining 77 per cent said they intended to remain in the profession.

Following rising compliance and insurance costs, in addition to general inflation, advisers have expressed frustration over maintaining and growing profitability. More than 90 per cent of practices told Adviser Ratings that they plan to lift their fees this year to stay afloat.

Particularly, as the industry awaits the government’s response to the Quality of Advice Review, handed to the Treasury at the end of last year, precariousness remains high among advisers.

Moreover, most licensee segments were represented in those planning to depart, with the exception of banks and limited licensees.

Adviser Ratings also questioned the respondents regarding their plans to potentially switch licensees.

Interestingly, three-quarters of respondents expressed a desire to remain in the same licensee, while the remaining quarter were either planning to switch (10 per cent) or were unsure (16 per cent).

The intention to switch licensees was most prevalent within the diversified licensee segment, with over half of that group expressing their intention to apply for their own licence.

Around one in seven advisers with solo or boutique licensees additionally said they intended to switch this year. This cohort has been disproportionately affected by rising costs, Adviser Ratings suggested.

Despite the heightened desire to switch among some segments, Adviser Ratings explained that a quieter year for licensee movement is on the cards. Last year, the number of adviser departures almost matched (1,590) licensee switches (1,600), but it was the slowest year for licensee movements since 2014.

Meanwhile, the four years prior saw almost 11,000 advisers move to new licensees in the wake of the exodus of banks from advice, while more than 12,000 advisers exited the profession altogether.

Adviser Ratings has previously said that adviser numbers could drop to below 13,000 by 2025, but its expectations may be subject to change with potential new regulation coming into play this year.

The body is now hoping that adviser exits will slow sooner rather than later, allowing time for numbers to gradually recover.