Of the 6,105 total advice practices currently in the Australian advice ecosystem, 61% are now one-person bands, according to the latest quarterly data from Adviser Ratings .
The Adviser Musical Chairs Report for Q1 2024 says that the practice ecosystem “…now mainly comprises privately-owned businesses, with most occupied by a single adviser.”
It notes that increasingly, the boutique practice has been an attractive proposition for advisers seeking autonomy and control and that between 2022 and now, while the proportion of solo practices has grown “…the footprint of diversified and limited licensee practices has shrunk.”
Adviser Ratings notes that historically, it’s been difficult for boutique practices to achieve scale and, in turn, build profitability “…however, technology is enabling businesses to increase their margins, especially if they embrace outsourcing.”
As the chart below shows of the 6,105 total practices, 1,890 of them were privately owned with 1-10 advisers and of these 953 have one adviser. Under the 1,405 licensees with 11-100 advisers, another 974 had one adviser; while in the largest privately-owned cohort (100+ advisers) 1,370 had one adviser.*
Matt Rady, the CEO of BT, the report’s sponsor, says the number of new advisers entering the sector is not enough to replace those leaving the industry.
… once again, fewer than one hundred new advisers joined the profession across the (first) quarter…
Adviser Ratings says that once again, fewer than 100 new advisers joined the profession across the (first) quarter.
“Only twice have we seen the new entrant number hit three digits, which is far off the level of growth required to see total adviser numbers increase. At the same time, the number of exits was up for the quarter, but only marginally.”
The report states 288 advisers ceased their registration in Q1, broadly in line with the previous two quarters, and well below the heights of 2021.
January is typically a quiet month for adviser exits, and this year was no exception, with 75 departing.
…we’re likely to see a further lift in switches next quarter…
There’s been plenty of musical chairs going on too, with quarterly switching activity slightly elevated on the same period last year.
Much of it can be explained by corporate activity, states the report’s authors.
“Typically, there’s a lag effect that can last several quarters, so we’re likely to see a further lift in switches next quarter.”
It notes too that at an individual level, “…advisers are facing higher costs themselves and demanding more value from their licensee. We expect to see more advisers shopping around to find AFSLs that fit their needs and circumstances.”
