{"id":54121,"date":"2021-02-09T07:38:23","date_gmt":"2021-02-08T21:38:23","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=54121"},"modified":"2024-10-30T08:45:21","modified_gmt":"2024-10-29T22:45:21","slug":"net-adviser-outflows-still-subdued","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2021\/02\/09\/net-adviser-outflows-still-subdued\/","title":{"rendered":"Net Adviser Outflows Still Subdued"},"content":{"rendered":"<p>Net adviser outflows continued at a subdued pace in the fourth quarter of 2020, with total advisers numbers contracting by two percent for the quarter, according to <a href=\"https:\/\/www.adviserratings.com.au\/\" target=\"_blank\" rel=\"noopener noreferrer\">Adviser Ratings.<\/a><\/p>\n<p>The firm\u2019s <em>Adviser Musical Chairs Report<\/em> says that by end Q4 2020, the adviser population had reduced to 20,715, with the net decline of 431 advisers from Q3 2020 being \u201c&#8230;the second lowest quarterly decline since the industry started net contraction in 2018\u201d.<\/p>\n<p>(Also see: <a href=\"https:\/\/riskinfo.com.au\/news\/2020\/11\/05\/fewer-advisers-leaving-industry-in-q3-report\/\" target=\"_blank\" rel=\"noopener noreferrer\">Fewer Advisers Leaving Industry<\/a>).<\/p>\n<p>It says that 645 (3.0 percent for the quarter, 12 percent annualised) advisers left the industry in Q4 2020, almost identical to the previous quarter. But the overall reduction in adviser numbers was 431, as:<\/p>\n<ul>\n<li>26 new advisers joined the industry<\/li>\n<li>188 transitioned back after being previously ceased<\/li>\n<\/ul>\n<p>During the quarter total licensee numbers increased marginally by six to 2,163 \u201c&#8230;extending a growth trend for two quarters running now, despite an overall decline of 60 licensees (2.7 percent) over the last 12 months and 119 (5.2 percent) over 24 months\u201d.<\/p>\n<p>Another key finding was that the net reduction in the total adviser population over the last two years was 8,000, from the industry peak in December 2018.<\/p>\n<figure id=\"attachment_54124\" aria-describedby=\"caption-attachment-54124\" style=\"width: 360px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2021\/02\/MC-2-l.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-54124\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2021\/02\/MC-2-l.png\" alt=\"\" width=\"360\" height=\"560\" srcset=\"https:\/\/riskinfo.com.au\/news\/files\/2021\/02\/MC-2-l.png 360w, https:\/\/riskinfo.com.au\/news\/files\/2021\/02\/MC-2-l-193x300.png 193w, https:\/\/riskinfo.com.au\/news\/files\/2021\/02\/MC-2-l-270x420.png 270w\" sizes=\"auto, (max-width: 360px) 100vw, 360px\" \/><\/a><figcaption id=\"caption-attachment-54124\" class=\"wp-caption-text\">Courtesy of Adviser Ratings.<\/figcaption><\/figure>\n<p>The report says that total adviser movement for the quarter was the lowest in more than two years, with subdued results for both exits and for switches.<\/p>\n<p>\u201cAre advisers simply taking a breather after a tumultuous 2020, or will we see a return to the relentless pace of 2019\/H1 2020?,\u201d the report asks.<\/p>\n<p>It says that with the continued shrinking of the total adviser pool, and plenty of examples of businesses collapsing and increased mental health pressures \u201c.. it is easy to be gloomy about prospects for the industry.\u201d<\/p>\n<blockquote><p>&#8230;two surveys identify a core of advisers that are excited and motivated about what the future brings&#8230;<\/p><\/blockquote>\n<p>However, the report says that results from two surveys run by Adviser Ratings over the last two months brings some hope.<\/p>\n<p>\u201cTogether, they identify a core of advisers that are excited and motivated about what the future brings.\u201d In the first survey of 1,000+ advisers:<\/p>\n<ul>\n<li>75 percent had already completed or were waiting for their results from the FASEA exam, compared to 52 percent industry-wide<\/li>\n<li>&#8220;Even more encouragingly&#8221;, 63 percent of surveyed advisers were expecting to achieve the necessary tertiary qualifications within the next two years, three years ahead of the January 2026 regulatory deadline<\/li>\n<\/ul>\n<p>Adviser Ratings says a second survey of more than 500 practice owners in the same period identified 65 percent of them that were growing their customer books, and 55 percent expected to grow adviser numbers either organically or through acquisition.<\/p>\n<p>It says that anecdotally, consumer demand is also increasing, fuelled by a combination of financial stress from Covid-19; improved awareness\u00a0 from the government\u2019s early access to super programme and through a greater variety of channels offering help.<\/p>\n<p>\u201cAs we have said before, an imbalance between demand and supply augers well for financial advisers who choose to stay.<\/p>\n<p>\u201cIt\u2019s also why capital continues to be invested into the sector, whether directly into advice businesses or into the supporting vendor ecosystem of platforms, dealer-to-dealer services, managed account providers and financial planning software manufacturers.\u201d<\/p>\n<p><strong>Advisers Switching Licensees<\/strong><\/p>\n<p>In Q4 2020, 511 advisers (9.7 percent annualised) switched licensees, \u201cwhich was comfortably the lowest rate seen in the last two years\u201d.<\/p>\n<p>The report says the major adviser purges from AMP and ANZ from earlier in 2020 have potentially flared out, \u201calthough we anticipate seeing more IOOF-MLC departures in Q1 2021 as negotiations on stay-versus-go are concluded\u201d.<\/p>\n<p>Adviser Ratings&#8217;\u00a0 latest survey of\u00a0 more than 500 practice owners indicated strong interest in switching licensees, with 16 percent planning to make this change.<\/p>\n<p>\u201cDespite this demand, there are many potential reasons for a slowdown. The\u00a0 larger non-bank licensees are attracting and absorbing many of these switches, however their increasingly strict vetting and onboarding processes are likely to jam the pipeline.<\/p>\n<p>\u201cThe same applies to applications to ASIC for new licences, as well as the increasing difficulties of securing PI cover. And when advisers finally get serious about making the move, many are daunted by the actual effort involved or don\u2019t know who to trust for advice.\u201d<\/p>\n<p><strong>Licensee Movements<\/strong><\/p>\n<p>In the quarter, licensee volumes grew for the second quarter running as 32 new licences were registered, 28 shutdown and two returned back to the register. The trend towards shrinking licensee volumes that commenced in Q4 2018 has now stabilised, the report notes.<\/p>\n<p>The composition of the 32 new licences established in Q4 has:<\/p>\n<ul>\n<li>53 percent single-person self-licensed boutiques<\/li>\n<li>88 percent with no more than five advisers<\/li>\n<\/ul>\n<p>In terms of license de-registrations the majority of businesses continue to be relatively young, however this quarter was notable for the surprisingly high proportion of limited licensees, the report says.<\/p>\n<p><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2021\/02\/Musical_Chairs_Report_2020_Q4.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">Click here<\/a> to see the full report.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Net adviser outflows continued at a subdued pace in the fourth quarter of 2020, with total advisers numbers contracting by two percent for the quarter, according to Adviser Ratings. The firm\u2019s Adviser Musical Chairs Report says that by end Q4 2020, the adviser population had reduced to 20,715, with the net decline of 431 advisers [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":54129,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-54121","post","type-post","status-publish","format-standard","has-post-thumbnail","category-general"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/54121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=54121"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/54121\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/54129"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=54121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=54121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=54121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}