Adviser exits accelerate as 2021 ends

Despite the good news emanating from the Government on a reset of the Financial Adviser Standards and Ethics (FASEA) regime, hundreds of advisers were still headed to the exits, according to the latest data from WealthData.

The data revealed a net loss of 126 advisers this week, reflecting the upturn in exits which was always expected ahead of Christmas and New Year, with the likelihood being that there may be well over 3,500 advisers who have left the Financial Adviser Register in 2022.

This may even be exceeded in circumstances where there is expectation of an acceleration over coming weeks in the wake of FASEA exam failures.

Here is the analysis provided by WealthData principal, Colin Williams:

Net Change of advisers (-126)

31 Licensee Owners had net gains for 49 advisers

47 Licensee Owners had net losses for (-176) advisers

35 Individual Licensees had net gains of 68 (57 excluding Ord Group – see notes*)

58 Individual Licensees had net losses of (-184)

13 Provisional Advisers (PAs) and 1 ceased. This indicates that (-139) experienced advisers dropped off the FAR this week.

Summary

A very busy week, once again dominated by losses at CBA who lost a further (-74), leaving them with only 37 current advisers. At this stage it is not clear if the advisers exiting CBA will reappear at AIA.

Note the name change of IOOF to Insignia. The name change also came with further losses along with AMP, both in double figures.

We did see quite a bit of movement at the self-licensed level with 8 new and 6 ceasing. Of the eight new ones, 6 were classed as in the holistic Financial Planning peer group and 2 Investment Advice business. For the closures, none were providing holistic Financial Planning or Investment Advice.

*E.L. & Baillieu, owned by Ord Minnett are showing growth of 11 on dashboard 1A. However, all advisers are already licensed to Ord Minnett. As a result, we are not showing any growth at Ord Minnett group as the licensee owner on Dashboard 1B.

Growth This Week

Licensee Owners. One new licensee (not shown in the dashboards, contact us for details) commenced with 4 advisers. 5 licensee owners had growth of 3 including Sequoia and HESTA Super.  Centrepoint Group also plus 3, who continue to leverage advisers away from Mortgage Choice and this week taken more away from insignia. For the week Centrepoint hired 8 and lost 5.

Another 5 licensees had growth of 2 each, including 3 new licensees. 20 licensee owners had net growth of 1, including 3 new licensees (not shown in dashboards).

Losses This Week

CBA Group (-74) and as mentioned earlier we are not aware of how many may be transferred to AIA group where past CBA advisers have secured positions. Insignia Group, formally IOOF down (-20) and fellow conglomerate AMP also having a tough week, down (-13), with AMP Financial Planning dropping below 600 to be at 599.

Marsh Mercer down (-6) followed by Bell Potter down (-4) and Mortgage Choice continue to wind down also (-4).

Thereafter, there is a long tail of losses. As for the 6 closed licensees (down to zero advisers), they accounted for a total of (-10) advisers.

Year To Date Data

As we close out the year, there is a tendency to look for perceived winners and losers. We still have a few weeks to go, and I suspect there will be a fair bit of reporting in January that will be backdated into December. That said, below is how things are sitting.

Financial advice has had a disappointing year, but not unexpected. Current loss of advisers at (-2,189) or (-10.61%). Worse is yet to come as we foresee significant losses as advisers either fail or opt not to attempt the FASEA Exam – We covered this off earlier in the week – see FASEA Exam Wrap For 2021. The losses may end up close to (-3,500).

Williams noted that different peer groups had very different years. The Investment Advice peer group (focus on portfolio advice) only had a loss of (-102) advisers or (-2.98%). The Accounting – Limited Advice (basically providing SMSF Advice are down (-537) advisers or a whopping (-27.12%). We expect this peer group to suffer this greatest losses, at a proportional level, as advisers without passing the FASEA Exam are withdrawn from the ASIC FAR.

The largest peer group – Financial Planning were down (-1,303) or (-10.18%). What was significant for this group is the number of new licensees at 119 and (-45) closing. A net increase of plus 74. Easily the largest growth sector of the advice market.

As for individual companies, (Dashboard 1B) AIA because of the deal with CBA have the largest growth of 62. Oreana are the standout group with organic growth of 37. After that ASVW a new licensee at 19 and Centrepoint Group showing that large advice groups can grow, up by 19. The numbers for Centrepoint include the licensees associated with Clearview and are backdated to the start of the year.

As for losses, Insignia and AMP dominate and CBA in third spot after ceasing its advice arm.

As mentioned, we do expect a lot of movement of the next few weeks with numbers backdated into December, so we will revisit the tables for 2021 in January 2022.