The number of financial advisers has dropped since March, contributing to a significant increase in advised wealth that has transitioned between advisers over the past year, a recent report on the financial advice industry has revealed.
According to Adviser Ratings’ “Adviser Musical Chairs Report” for the June quarter, the adviser population fell by 1198 to 21,631, representing a 5.2 per cent drop from the first quarter. The reduction in the number of advisers over the past quarter also represented a 21 per cent annualised decline for 2020, compared to the 16 per cent reduction in adviser numbers in 2019.
“The late June decision on a legislated extension to the Financial Adviser Standards and Ethics Authority exam deadline meant that this ongoing uncertainty hung over the heads of advisers for much of the quarter and would have contributed to further exits,” Adviser Ratings said.
In addition, the report revealed 679 advisers had switched licensees, representing 12 per cent annualised switching, which was consistent with the performance in recent years despite predictions of a drop in the number of advisers switching due to the effects of the COVID-19 pandemic.
“The anticipated slowdown in switching that we anticipated last quarter due to COVID-19 has not eventuated,” Adviser Ratings noted.
“This was on the assumption that there would be a brief hiatus as the pandemic caused businesses to pause and attempt to wait out the storm. On the contrary, COVID-19 appears to have catalysed a range of corporate actions that have propelled more advisers into finding new homes.”
The report also found advised wealth in transition from advisers exiting amounted to more than $120 billion at the end of June, a 13 per cent jump compared to the same time last year.
While addressing a House of Representatives Standing Committee on Economics hearing into financial advice in June, the Financial Planning Association and Association of Financial Advisers stated the scope and pace of reform and regulatory change in the financial advice sector had been partly responsible for the decline in the number of advisers in the sector and consumers seeking advice.
