Advisers challenged by capacity, shrinking talent pool

Ahead of the Adviser Innovation Summit 2024, Forte Asset Solutions founder and director Steve Prendeville said the adviser exodus has stabilised on the back of a “renewal of confidence” in the market they are operating in, particularly due to legislative certainty.

At the Adviser Innovation Summit, Prendeville will speak about how advice businesses can grow sustainably, provide tailored services and charge fees appropriately, and how advisers can evolve from being technical experts to exceptional business managers.

Advisers have re-engineered their businesses, value propositions and fee structures, and streamlined systems and processes. Businesses have experienced organic growth and increased revenue and profitability as a result.

“But one of the biggest challenges facing our industry at the moment is that we don’t have a lot of spare capacity. We’re also being challenged by a reduced talent pool,” Prendeville told ifa.

Data from Adviser Ratings last year revealed that almost 3,000 advice practices have shut shop within the last five years. There has been a mass exodus of advisers over recent years due to regulatory changes triggered by the 2019 royal commission.

Since then, many in the advice profession have expressed that they are being flooded with new client requests but are unable to meet the demand due to the low number of advisers on hand to service them.

“We’ve had this mass exodus and there’s no way we can fill it,” Prendeville said.

“We’ve also got growth coming through where most businesses are at full capacity and can only take on one or two new clients a month. I think there’s confidence that advisers would reinvest into their business, including their people and systems and processes. But there’s not enough people or talent to be able to bring on to the team.”

Prendeville suggested outsourcing all non-core operational business features such as paraplanning, administration, marketing, and IT services to increase capacity while reducing labour costs without sacrificing the quality of output.

“I think we’ve gone through a tipping point with outsourcing,” he noted.

“There’s now more security available around the data and information that is being shared. There’s more excellence on both sides, whether in Australia or other countries like the Philippines, for example. We’ve got qualified and trained advisers and accountants overseeing operations.”

Implementing the Quality of Advice Review (QAR) recommendations and reducing red tape could further streamline processes, Prendeville highlighted, particularly if requirements around statements of advice are loosened.

“The hope is that we can move from a 55-page SOA to a plain English document of around 15 pages without all the legalese,” he said.

“This would make it easier for the client to understand what their adviser is going to do and for how much, what the objectives are, and how they're going to achieve it. Simplifying this process will also unleash more capacity.”

Strict parameters for super fund advice

Prendeville also supported recommendations for super funds to provide advice but underlined that it should be limited to general advice.

Last year, the Minister for Financial Services Stephen Jones said the government supports the creation of a new class of financial advice providers – to be termed “qualified advisers”. However, they will not be able to charge a fee or receive a commission relating to the personal advice they provide, as recommended by the QAR.

“Deciding to name them qualified advisers was a big misstep but hopefully we’ll see a revision of that position,” Prendeville mused.

“But I think the industry funds, in particular, need to be able to provide a certain level of advice because that’s how most Australians will be able to access advice.

“Having said that, they also need to understand their limitations. They should be advising on what their underlying products could achieve. Whereas an independent adviser looks at the whole market to provide specialist, holistic advice and retirement planning services.”

To hear more from Steve Prendeville about the latest industry trends and what a successful advice practice looks like, come along to the Adviser Innovation Summit 2024.

It will be held on Tuesday, 4 June, at the Telstra Customer Insights Centre, Sydney, and Thursday, 6 June, at Zinc at Fed Square, Melbourne.

Click here to buy your tickets and don’t miss out!

For more information, including agenda and speakers, click here.