Attrition is creating better quality advisers, says Praemium CEO

Approximately 12,000 advisers have left the industry in the last four years, according to Adviser Ratings. As part of its annual Landscape Report, the group asked advisers about their intention to stay in the industry in 2023.

Just over one in 10 (11 per cent) of advisers said they planned to leave, while 12 per cent were unsure whether they would stay or go.

The remaining 77 per cent said they intended to stay.

“The number of advisers is still shrinking, although we are confident that the quality of advisers is increasing as we shrink the pool,” Praemium chief executive officer Anthony Wamsteker told ifa.

“Some of the people leaving are retiring, but many of those who have left were unable to get qualified under the stricter regime.

“What it leaves is a gap. The supply of advisers able to give personal advice is not as great as the number of Australians who would benefit from having advice. So I do think that is a policy challenge. I’m not saying that the government should find a way to recruit more financial advisers. We have all sorts of jobs that need to be filled across the economy, from teaching to nursing. It’s not just about creating an environment where people want to become financial advisers. You’ve got to accept there’s a gap and address that challenge.”

Mr Wamsteker’s comments come after the release of Michelle Levy’s final recommendations on how advice can be made more affordable and accessible. 

She ultimately recommended that product providers such as banks and superannuation funds should fill the gap by providing personal advice to those unable to afford the fees of a financial adviser.

In her final report, Ms Levy noted that financial advisers and advice licensees said that the increasing cost of advice and the falling number of financial advisers, mean that those who remain in the industry increasingly provide advice only to high-net-worth individuals.

Mr Wamsteker agrees: “Advisers will choose to work with wealthier Australians because they are the ones who have the capacity to pay. The trend we are seeing of advisers targeting more affluent people will continue in the future.”