Adviser exodus continues but losses slow in FY2023–24

New data has shown a net loss of 452 advisers from 1 July 2022 to 28 June this year. But while the industry continued to bleed advisers over the last 12 months, the exodus has significantly slowed from the 2,647 losses seen in the corresponding period a year earlier.

According to Wealth Data, which collated the year-to-date details, a boost in exits is likely to be seen in the final days of the 2022–23 financial year. This could blow out adviser exits by about 200, taking the total number to well over 600.

“The end and start of each financial year does create a significant amount of adviser movement,” said Colin Williams, founder of Wealth Data.

“Excluding the losses at key cut off times for FSAEA Exams, resignations are at their highest in June with the last day being the most critical, and appointments are at their greatest in July. Much of the movement includes advisers switching licensees.”

In the week to 29 June, adviser numbers tumbled by 56, but total losses were offset by 10 new entrants taking the figure from 15,781 to 15,735.

“While the numbers are disappointing this week, we tend to see a volatile period as we end one financial year and enter the other. We go into more detail below,” Mr Williams said.

He expects next week’s data will be particularly interesting given its coverage of the end of the current financial year and the first few days of 2023–24.

“While there can be some ‘drag’ to get the complete picture, as licensees have up to 30 days to report movement, we tend to see the bulk of adviser movement reported quickly,” Mr Williams noted.

“We are expecting to see many advisers switching licensees, including switching into their own self-licensed AFSLs,” he added.

Speaking on a recent episode of Momentum Media’s Relative Return podcast, Nick Eatock, chief executive officer of intelliflo, a digital advice provider, said he anticipates adviser numbers to experience a notable rebound, soon.

Comparing the advice landscapes in Australia to its counterpart in the UK, Mr Eatock drew a parallel between the UK’s Retail Distribution Review (RDR) of 2012, which resulted in an adviser exodus, to the royal commission and the Future of Financial Advice (FoFA) reforms in Australia.

“What we saw, just before RDR went live, in the two, three months beforehand, the advice numbers dropped dramatically, just as they have done in Australia with the royal commission and so on. But what happened as a result of that was that, actually, advisers ended up having good conversations with clients,” Mr Eatock said.

Over subsequent years, he noted, the number of advisers grew, year on year.

“Alongside that, a whole bunch of new people came into the industry in the form of paraplanners as well,” Mr Eatock explained.

He believes that a similar scenario will play out in Australia.

“Essentially, it ended up becoming a good news story,” Mr Eatock opined.

While the UK still suffers an advice gap, it has narrowed over the years and is expected to continue to do so.

“So then, when you paint that against the Australian market, I think exactly the same thing is happening, just years down the road. We’ve seen the adviser numbers drop significantly, but we think that they will bounce back.”