Adviser numbers stabilise, a positive sign for the profession: Report

Investment Trends’ 2024 Adviser Product and Marketing Needs report found the number of advisers appears to have stabilised after years of significant decline.

Following the mass exodus of advisers in 2019, which saw more than 4,000 people leave the profession in one hit as a result of the royal commission, the profession has continued to bleed advisers.

However, new research shows that the number of advisers has finally stabilised, with 15,516 registered advisers as of May 2024, down only 1 per cent from 15,630 in 2023.

It is important to note that the past few weeks have seen a considerable fluctuation in the number of registered advisers due to the end of the financial year.

According to Wealth Data, the week ending 27 June saw a net loss of 81 advisers, bringing the total count down to 15,508 advisers. Although the following week, ending 4 July, did see a net loss of 78 advisers, which can likely be attributed to the final days of the 2023–24 FY, there was also an increase of 78 advisers, leaving the total number of advisers at 15,430.

Given the dramatic loss of advisers over the last five years, Wealth Data said the 2024–25 FY is “off to a positive start”.

The proportion of advisers intending to leave the profession also decreased slightly, with only 6 per cent planning to exit within the next two years, down from 7 per cent last year.

Investment Trends said data indicated a “notable trend”, the rise of “insourcers”, which it explained as advisers who view product selection as essential to their value proposition. It said the group has seen significant growth over the past year, with many managing larger funds under advice (FUA).

Speaking on the findings, Investment Trends’ head of research, Dr Irene Guiamatsia, noted the positive implications of more advisers remaining in the profession and the opportunities it will bring in the future.

“The stabilisation in adviser numbers and the decline in exit intentions are very promising developments. These trends should open up significant potential for advisers to enhance their service offering and drive growth in the financial services sector,” Guiamatsia said.

Advisers appear to have gained more confidence in their investment strategies, with 35 per cent not intending to make changes to their approach to investment selection, up from 26 per cent in 2023.

The report did, however, note a “significant shift” in their preferred type of investments, with advisers now giving equal consideration to ETFs and active unlisted managed funds when constructing core portfolios.

According to the investment firm, there is an opportunity for super funds to enhance adviser distribution by focusing on research ratings, digital tools, and client education for end clients.

Notably, the findings revealed that nearly 70 per cent of advisers recommend their main platform’s super fund offering to clients, “underscoring the potential impact of focusing on these areas”.

When recommending a super fund to clients, the report found that advisers also give significant consideration to a number of other factors, including fees (73 per cent), the range of investment options (57 per cent), good customer service and support (49 per cent), and online access for clients (42 per cent).

Guiamatsia explained that advisers’ views have shifted in recent years, opening up opportunities for product providers in both the investment and super fund industries.

“Advisers’ willingness to equally consider using a mix of passive and active investments highlights a significant strategic opportunity. We have seen ETFs overtake active unlisted managed funds as the preferred investment product for core portfolio allocation, with managed accounts, index unlisted managed funds, and direct shares topping the list,” she said.

“Advisers are increasingly demanding resources that simplify complex information and can be easily shared. Superfunds that address these needs will be in the best position to strengthen their relationships with advisers, ultimately leading to increased loyalty and advocacy.”