Licensee Numbers Levelling Out – Report

For the second quarter in a row, Adviser Ratings is reporting a net increase of licensees – albeit a very slight one.

The firm’s Adviser Musical Chairs report for the first quarter of 2021 found that 35 licensees exited over the quarter, while 45 were registered.

The report says that while the increase of 10 licensees is small, “…it’s further evidence the previous trend of licensee contraction has levelled out.”

Adviser Ratings states that for the past two quarters, new and wound-up licensees have been tracking at the same pace, noting that this is a “markedly different story” to the one it was telling in June last year, where de-registrations were outpacing registrations at a ratio of three to one.

The report also adds that while the licensee segmentation was stable in Q1 overall, “…we did see the continued growth of smaller, privately-owned licensees and the contraction of limited licensees. Small private licensees (1-10) grew 2.3 percent, while limited licensees shrunk by 3.8 percent.”

Other key findings in the report included:

• The percentage of advisers (621) who switched licensees in the quarter was 2.2 percent
• The percentage of advisers (369) who left the industry in the quarter was 1.8 percent of the total adviser pool
• The percentage of advisers (124) who departed from bank-owned licensees was 10.4 percent
• 37 new advisers registered this quarter, which was more than 50 percent of the total for 2020

…new entries to the industry were once again dwarfed by the number of advisers exiting

Adviser Ratings noted that the new entries to the industry were once again dwarfed by the number of advisers exiting. For every adviser who joined the industry in the last quarter (37), there were 10 who left (369).

It says this ratio is unsurprising, given the dual pressures of the Covid-19 pandemic and professional standards deadlines.

Despite those factors, there were there were fewer adviser exits than have been seen for any single quarter since the start of 2019, however Adviser Ratings says it’s  “…too soon to interpret this as a sign of post-Covid business recovery. The true test will come later this year when the effects of the end of JobKeeper start filtering through.”

Its industry overview found there were 20,346 licensed financial advisers.

Click here for the full report.