What’s Holding Back Adviser Numbers?

Our latest poll stems from views expressed at our recent industry Round Table discussion supported by AIA Australia, which considered adviser numbers among many other issues.

Under the theme of financial advice in Australia being at a crossroads, the panel comprising key industry stakeholders, including your adviser peers, mostly supported the contention that the shortage of financial advisers in Australia now stems from a lack of infrastructure and training opportunities rather than a lack of interest in the profession (see: Lack of Infrastructure Behind Adviser Shortage).

Rather than debating the well-documented reasons that adviser numbers have plummeted in recent years, this poll is instead reflecting on the key factor or factors now holding back the entry into the sector of more advisers than is currently being experienced.

When it comes to life insurance advice, it’s clear that the commercial equation for new entrants is incredibly difficult to make work for new entrants with no access to existing client books.

But in a changing industry environment which is seeing growing numbers of risk-focused advisers operating under a salaried arrangement (where the dealer group retains the commissions), Striver founder, Alisdair Barr, emphasised that the potential supply of prospective new financial advisers exists, but was being stifled by a lack of awareness of financial and life insurance advice as a career pathway, combined with an almost total inability for the sector to accept anything other than a trickle of new entrants on an annual basis.

While outlined in more detail in Part 1 of the Round Table, some of the factors inhibiting more new advisers from entering the sector, according to your industry peers, include:

• Too many advice practices lack the skills and capability to provide proper training
• Current minimum education standards represent a ‘massive hurdle’ for new entrants
• The time and cost to firms in taking on trainee or PY advisers – the capacity to do so – means only a handful of new entrants can be supported by them each year
• Restricted commissions are still a key factor when it comes to new risk-focussed advisers

So, while risk commissions remain a factor, it is not the main stumbling block in the quest to achieve the outcome of more Australians receiving more financial and life insurance advice from more advisers.

Do you agree with this argument? Or do you hold there are other issues at play here? Tell us what you think and we’ll report back next week…