Adviser numbers grow again but life/risk numbers may never recover
The number of financial advisers on the Financial Adviser Register grew again this week but there appears to be no coming back for many of those who specialised in in offering life/risk advice.
While WealthData’s latest analysis of the FAR revealed 10 more advisers being added to the register, the company’s analysis of specialist life risk advisers has confirmed the significant decline which decline in the aftermath of the Life Insurance Framework and which accelerated under the Financial Adviser Standards and Ethics Authority (FASEA) regime.
WealthData principal, Colin Williams told Financial Newswire’s Life Insurance Outlook conference this week there was a surge of new advisers in 2016, up by 2,186 driven by Accountants joining on restricted AFSLs and a second surge in late 2018 of 2,893 advisers as most joined to get on the ASIC FAR before 2019 FASEA requirements.
However, he said the number of advisers who were authorised to offer Life insurance declined from 20,096 to 13,076. A reduction of (-7,020) or (-35%), a bit less than the total of (-43%)
The number of advisers who can offer risk insurance but not investments, may have once been seen as a specialist, reduced from 1,768 to 587 a reduction of (-1,181) or (-67%).
Key Adviser Movements This Week:
Net Change of advisers +10
Net Change of +51 for 2023 YTD
27 Licensee Owners had net gains for 38 advisers
21 Licensee Owners had net losses for (-27) advisers
2 new licensees and 2 ceased
5 Provisional Advisers commenced and zero ceased
Number of advisers active this week (appointed / resigned) 72.
Summary
As predicted last week, we saw many of the advisers who ceased last week renter the ASIC FAR as they transitioned to new licensees and boost the net gain to +10. Calendar YTD is looking very positive at +51 especially when compared to the same period back in 2022 when it was showing (-642).
Growth This Week
A relatively new licensee Dirigere Advisory picked up 6 advisers, most moving away from Lifesherpa (Money Sherpa). A new licensee commenced with 5 advisers with a practice moving away from Hillross (AMP Group) – details given to Members.
Licensee owner Jason Valantine Davis – Aavana Financial Solutions up by 2 with both advisers coming back into advice after being off the ASIC Far for a few years
Financial Professional Group also up by 2 advisers with both advisers still showing as current at other licensees.
23 licensee owners were up by 1 including WT Financial Group who hired a Provisional Adviser. Insignia up by 1 after hiring an adviser from Count. Perpetual, Ord Minnett Group and Capstone also all up by 1. The remaining new licensee commenced with just the 1 adviser.
Losses This Week
AMP Group down by (-5), as mentioned above, they lost 1 major practice from Hillross
FSSSP Financial services (Aware Super) down by (-2) – both advisers not showing as current elsewhere
TAL Dai-Chi (Affinia) also down by (-2) and neither adviser showing as being appointed elsewhere
18 licensee owners down by (-1) each including Bell Financial Group, Count and Oreana. Both licensees that closed only had the one adviser each.
I think that reduction in commission is a factor plus most advisers believe that it is a difficult proposition to charge fees in that area,
Also I think younger advisers believe there is a selling factor as distinct from an advisory factor and therefore shy away.
By 2026, when all risk advisers must have the AQF8 degree, there will be next to zero specialist risk advisers left. The requirement for this completely inappropriate, over the top and punitive degree will force risk advice specialists away from the things they love – their business and clients. Advisers lose and the clients lose. Imagine having a heart surgeon needing to be fully qualified in orthopedic and brain surgery and a litany of other specialist domains just to maintain their medical licence and specialize in heart surgery. That’s the concept these clownish politicians have forced upon our once great industry. How many heart surgeons would stay if this idiocy hit the medical industry? Well, that’s what’s happening to specialist risk advisers.
The life companies sat quietly while these foreboding changes were allowed to sail through with hardly any real opposition. So much for the life companies being the trusted ‘adviser advocates’ they like to call themselves. What an absolute mess! Now they will get what their inaction and duplicity has created – no business coming through the front door and they’ll get it very soon. Investment/financial planners (who often avoid risk product advice in the main) and direct marketing (Robo) risk sales will have absolutely NO chance of helping clients properly with risk advice or products.
The smart financial planners won’t touch the new IP products anyway for fear of compliance breaching – they are simply too ‘striped-down and hollowed out’ contractually and too dangerous to recommend for a number of practical AND compliance reasons.This is especially so when doing any sort of policy replacement with older BETTER policies! I do hope life company statutory reserve funds are in good shape because without an income flow the life companies are certainly going to need those funds. Are you awake yet APRA?
Good analogy, badly applied. Heart surgeons are required to have generalist medical degrees and internships before they can become specialists. They need a good understanding of a broad range of medical areas they may never actively practice in, that may impact their patient’s health. They need to know how to spot issues that require collaboration or referral to other specialists. They need to know how their heart surgery may interact with other diseases, medications, etc the patient may have.
Same with financial advice. Personal insurance can never be totally segregated from other aspects of a client’s financial situation. Good personal insurance advice requires a good understanding (but not necessarily a specialisation) of super, investments, estate planning, tax, and many other areas. Hence the requirement for professional financial advisers to have education and examination across all these areas, prior to specialising in any particular one.
Yes BUT . . . the degree and high level of education upon which they are insisting is beyond ridiculous for a risk adviser to undertake. It is AQF8 level for God sake! Just to help mum’s and dads with term insurance and help protect the family income?! Sure some knowledge around the other stuff you mention but to AQF8 level” It is reprehensible they are putting small businesses/adviser practices out of business insisting on this idiocy.VERY few of the politicians would have a job if it was insisted they scrub up on their qualifications for their job to this unrealistically high standard. Would be funny if not so misguided. Seinfeld and Kramer would have a field day with it. It would indeed be ‘specializing’ in investment advice and full FP for a risk adviser to undertake this inappropriately high level of study. You said it best when you picked apart my example . . .
The minimum level of degree requirement for financial advisers is AQF7, not AQF8.
AQF8 degrees such as a Grad Dip are an option for those who have completed other degrees or have significant industry experience, and are therefore deemed capable of meeting the requirements through a lesser amount of higher level study. But experienced advisers who want an easier option can always do an AQF7 level degree, it will just take longer.
I’m still prepared to have a bet that there will be less financial advisers on 31/12/2023 than there were on 1/1/2023.