financial advice

Experience drain not biggest advice issue

industry experience financial advisers FAAA Financial Advice Association Australia

The reduction in the number of financial advisers with significant industry experience is not the most worrying trend affecting the sector.

Financial Advice Association Australia (FAAA) analysis of the industry has identified a more alarming trend regarding financial adviser numbers than the exiting from the sector of practitioners with substantial years of experience.

“In 2019, almost 35 per cent of [financial] advisers had less than five years of experience. And now in 2024, only 5 per cent of the advisers on the register have less than five years of experience,” FAAA chief executive Sarah Abood revealed at the industry body’s Roadshow 2024 held in Sydney last Friday.

“We think a lot about and notice the experienced advisers, and that’s been a real issue, but I would argue that an even bigger issue is we’ve lost the fresh eyes, we’ve lost the new blood coming in.

“The make-up of the profession has changed so much that the average adviser today in 2024 has five years more experience than the average adviser in 2019.”

She admitted to being surprised by the figures and suggested they demonstrated the serious need to encourage more people to join the financial advisory profession.

According to Abood, the data set also highlighted another worrying direction in which the industry had moved – that being its increased fragmentation.

“There is no licensee in Australia today with more than 500 advisers. Now that to me is really, really stark. We all know that the big banks [and] that the majors exited post the royal commission, but this really points out just how profound that change has been,” she noted.

Further, contrary to popular opinion, the analysis showed the number of self-licensed practitioners had not significantly shifted, she said.

“The rhetoric is very much about lots of advisers going out on their own, and there is a bit of that, but we can see more [growth] in the smaller licensees [servicing less than 10 advisers]. So there’s actually not been a lot of change in the single-adviser licensees,” she said.

“Again, I don’t know if that is a surprise to you, but when I pulled those numbers it was another reminder of just how much our profession has changed in the last five years.”

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