100,000 advice clients orphaned or in limbo

Around 100,000 financial advice clients ceased receiving advice or were orphaned by their adviser, according to the latest analysis released by AdviserRatings.

The company’s research also pointed to only 1,200 specialist risk advisers remaining in the industry and 234 Australian Financial Services Licenses having been discontinued in 2021.

With Adviser Ratings predicting the departure of a further 2387 advisers from the industry in 2022, the cost of advice and the number of orphaned clients look set to grow.

Releasing the top line findings of his firm’s Landscape Report, Adviser Ratings chief executive, Angus Woods said the advice industry had been in a state of flux for a number of years, and this was continuing.

He pointed to his company’s research as finding there are 100,000 fewer customers of financial advice today and 3,323 fewer advisers compared to 12 months ago, with the median cost for advice increasing another eight per cent, to $3,256.

This has coincided with a general improvement on the standard advice, with the Adviser Ratings Adviser Quality Score (AQS) increasing from 678 at the end of 2018 to 707 at the end of March 2022, based on a score out of 1,200.

It said that to service clients more effectively and efficiently, research indicated that financial advisers intend on using investment platforms more in 2022, with pure platform plays and listed companies Hub24, netwealth and Praemium expected to be the winners.

Advisers also intend on meeting evolving client needs through their services, with more than 50% aiming to increase ESG exposure through the year, for example.