Advisers see strengthened demand in 2023

The advice industry is seeing 50 per cent of newly created roles which point to demand-driven growth across the industry, while the remainder is to replace advisers moving to self-employed or changing careers, according to Recruit2Advice principal Dugald Braithwaite.

“In particular, senior advisers with strong relationship skills to meet the demand of organic growth many practices are enjoying, and in-organic growth to satisfy client needs from extensive activity in acquisitions,” Mr Braithwaite said.

“There is some backfilling taking place to equalise demand and supply for advice.”

The top three skills in demand for senior financial advisers are advanced interpersonal relationship skills, advice strategy and investments technical grounding, alongside commercial aptitude focusing on the value of advice and appropriate client fees.

Mr Braithwaite said advisers and firms well set in the market with a good reputation are currently inundated with referrals and approaches from new clients.

“We are hearing anecdotally and first-hand many practices experiencing high levels of client referrals often excessive to their capacity or ability to keep up,” he said.

“This is leading to sandbagging or pipelining in many instances, leading to discussions around creating a new role for a senior or associate financial adviser.

“This suggests the value of advice is highly regarded in the Australian community and sought after, even with upward pricing pressures to deliver advice in recent years. This bodes well for the industry in the medium term and for professionals looking for new opportunities.”

Evolving market conditions

Regarding salaries, Recruit2Advice said the mid-range or sweet spot for advisers remains at around $130–150,000 with bonuses for achieving client retention and revenue targets, plus gateway measures (compliance audit, PD, teamwork etc).

The firm also found that employers are increasingly willing to structure advisers’ overall earnings linked to the financial performance of the client book and business in general. Further, in many instances, clients are willing to increase upfront remuneration to $170–180,000 to secure the best talent in the market, capable of managing HNW and sophisticated clients with complex servicing requirements.

Meanwhile, demand for graduates is limited in the private sector, noted Mr Braithwaite. The market has shifted rapidly in the past three months with high demand to “re”-adopt the associate adviser role that was very popular prior to the royal commission and FASEA regulations.

“We see this client shift as a response to increasing capacity to absorb the referrals and new client demand mentioned above with an 18–24-month development plan into full advice roles for the associates, with mentoring and PY offered,” he said.

“On the supply side, candidate demand for associate roles is extremely high with limited market growth presenting limited opportunities in recent years.

“We see three different styles of associate/PY candidates available in the market which include up and comers with strong client service and paraplanning skills sets.

“Re-entry advisers who had to sit out COVID and missed FASEA. Then there are career changers with parallel industry experience, many of whom have been waiting for the dust to settle in the advice industry.”

Challenges ahead

As adviser numbers have dropped in recent years, the quality of advisers has increased with education and professional focus, according to Mr Braithwaite.

“From a recruiter’s perspective, we find experienced advisers value our advice and guidance after so many years of change, to evaluate where they stand and assess how their skills and experience will be valued in the ever-evolving landscape that is the financial advice industry,” Mr Braithwaite explained.

“We’ve found in 2023 thus far, as the dark clouds are lifting from the industry, many advisers are taking the opportunity to reassess and reposition for the foreseeable future.

When looking at the challenges ahead, the single greatest obstacle facing the industry is in mid-level client service roles with limited or no supply in many regions.

The flow-on effect of the group exits of banks and institutions switched off graduate entry supply channels and that has started to bite, Mr Braithwaite explained.

“We see outsourcing not only becoming a popular option, but in many instances, the only option,” he said.

“Many across the advice industry may find this an odd comment, but from a recruiter’s perspective and for the health of the industry today and into the future, we say, bring back the banks.

“Clearly, the training ground of the past two decades, the industry would simply not be where it is today without them.”