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.