As a headline, it’s striking.
“4,200 advisers leave the industry.”
“Advice industry contracts by 15%”
Rainmaker Group’s head of research Alex Dunnin says, however, the sky is not falling. “There are now 22,300 advisers operating in Australia. This time last year there were 26,500.
“But five years ago, there were 18,300. This means while adviser numbers are continuing to fall, this fall takes us back only to where we were a few years back.”
Where have all the advisers gone?
There are a few theories on what’s happening in the industry. Some are ageing out and retiring. Some are making a career change.
The primary reason, says Dunnin, is that regulatory and technological changes are pushing out those who are unable to adapt. Those who choose to stay in the industry do so “because their business can withstand the regulatory and technological shock of what’s been imposed on them.
“Those who exit may be older or younger ones who have decided that transitioning to the new world of modern advice is not worth the trouble.”
There is still (a little) growth in the industry
The attrition rate for advisers does not mean there is no new blood. “Despite the falls in adviser numbers, there are a small number of advisers still joining the industry,” says Dunnin. “But this number is small – less than 200 in the past year.
Just because there is industry contraction does not mean there is industry stagnation.
“There is lots of movement between AFSLs,” says Dunnin. “About 4,000 advisers joined a new AFSL in the past year but about 7,500 ceased with an AFSL. The overwhelming momentum is towards advisers exiting.”
Where to upskill
There is a good deal of competition for those remaining in the industry, as well as regulatory changes. Dunnin says to succeed in this competitive environment, you’ll need to find a way to stand out.
“Massive structural change is being imposed on the advice sector by regulatory, societal, market, and technological change,” he says. “At risk of saying the obvious, this means advice businesses are fundamentally changing. Running these businesses in the future is likely to require vastly different skills.”
With changes to the referral pipeline and commissions, areas where advisers may need to upskill would be in sales and marketing, finding new business in previously unexplored channels.