More than 50 per cent of financial advisers are predicted to leave the industry in the next five years driven out by higher educational standards and further regulatory changes, according to Adviser Ratings.
The group made the prediction as part of its recently released 2018 Financial Advice Landscape Report which claimed 14,000 advisers will leave financial advice in the next five years, on top of the 7,000 which have left since 2015.
Adviser Ratings stated the large-scale departure of advisers will be the result of new educational standards introduced by FASEA, as well the ongoing breakdown of the institutional advice model which saw the number of advisers moving away from the major banks reaching 270 per cent of the historical rate in 2018.
The group claimed the future attrition rate was likely to increase and life insurance focused advisers and licensees had the highest attrition risk as they had the lowest adviser educational levels.
Adviser Ratings Managing Director, Angus Woods said the advice sector was undergoing extraordinary change and “…the impending withdrawals of major institutions from advice are compounding the impact of historic adjustments to adviser business practices driven by regulatory reform, predominantly FOFA and FASEA”.
Woods said the large-scale departure of advisers to date has been offset by 25 per cent net increase in the number of practising advisers over the last five years boosted by university graduates and the arrival of more than 2,000 accountants providing financial advice.
The 2018 Financial Advice Landscape Report drew upon Adviser Ratings’ proprietary data, census data, and results from an online survey conducted in Nov-Dec 2017 among 1,100 financial advisers.
Isn’t it strange, the FPA doesn’t believe your exodus survey figures !
I think there will be actually more than your survey has revealed.
But then again, they don’t even know what I do for a living even though I’ve been a FPA member for more than 25 years,…. and a CFP more than15 years.
Sadly, the likely exodus of so many experienced advisers – irrespective of the actual numbers – is a tragedy for the whole financial services industry. As an ‘old dog’ of 43 years total experience in the life insurance industry [31 as an adviser] the willingness to reach the required 2024 tertiary education requirements [at age 67] is very daunting and totally impractical to realistically consider. I am healthy and would prefer to work as long as I can. I will find a way of keeping a finger in the pie – even after 2024. The thing is, I do mentoring with younger advisers. The interesting thing being, that a number of these advisers -including a CFP or two – ask me for my ‘opinion’ on how to handle various life insurance client scenarios. They admit to a lack of depth of knowledge and experience in life insurance. In particular, they ask my ‘opinion’ on which life offices to consider for differing client situations. Yes, I imagine that whilst I will not be authorised to give life insurance advise in 2024, perhaps I can become a consultant to authorised reps. All the knowledge in the world, but not qualified to apply it!
Life Insurance advisers will have the highest attrition rate.
Why?
Because in the brave new world, vast experience will account for little, though bits of paper attained by an inexperienced, newly qualified on paper, adviser, will catapult them past the lowly experienced adviser, to go forth and share their theoretical knowledge.
We are now in a world where a tick on a checklist and a bit of paper, is far more important than having an adviser who has real life experience and who can actually help clients achieve what they need to do.
When the exodus occurs, who will then stand up and take responsibility, when it was so avoidable.
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