The effect the new Financial Adviser Standards and Ethics Authority (FASEA) education requirements and other legislative changes to the financial services sector are having in reducing advisory numbers is less severe than perceived, according to a business consultant.
However, before people can start to assess the impact of these factors they need to better understand the make-up of the financial advice segment of the market, NMG Consulting principal consultant David Hutchison told attendees at a recent OpenInvest Future of Financial Advice, Guidance and Investment Assistance roundtable in Sydney.
“From an advice numbers point of view there are currently 28,000 advisers on the [Australian Securities and Investments Commission] register. Of that [number] there are about 6000 or 7000 limited licensed accountants, there are people who can only sell time share, [and those] who can only advise on foreign exchange and other kinds of niche products,” Hutchison said.
‘So when you get down to how many [conventional] financial advisers that we think of who are actually there, you’re down to 18,000 or 19,000. You then also start thinking around how many of those are actually productive advisers and you’re probably down to 14,000 or 15,000.
“So when you hear about large numbers being thrown around about the adviser market changing, you’ve got to think about how it impacts on all of those different segments because it’s going to impact them in very different ways.
“Our work on the 14,000 or 15,000 and on the more productive end of that segment [indicate] we’ve got less than 8 per cent of that market suggesting they’re going to be leaving the market because of the education standards and other things going on.”
He noted the practitioners looking to exit the industry because of its changing operational parameters were older individuals planning to sell their businesses.
“So when you hear of maybe half of the adviser market leaving, it’s not definitely consistent across all of those levels,” he noted.