Australia’s financial advice gap is wide
In a week during which a further 15 financial advisers exited the Financial Adviser Register (FAR), new analysis has pointed to the scale of Australia’s advice gap.
The analysis conducted by WealthData indicates just how important the Treasury’s drafting of legislation to underpin the Quality of Advice Review (QAR) recommendations will be in terms of ensuring the availability and affordability of financial advice.
According to the analysis, undertaken by WealthData principal, Colin Williams, the scale of the problem equates to close to 12 million people being in scope to receive financial advice but there being only 15,800 advisers capable of doing so.
Williams acknowledges that the 12 million number is too high but suggests that the current number of financial advisers would not have the band-width to service a significantly reduced number of clients even with the reduction in red tape expected to accompany implementation of the QAR.
Even allowing for a 50% reduction in the 25 to 59 cohort of those seeking advice and accounting for 75% of those aged over 60, the WealthData analysis suggests advisers would be stretching to meet demand.
He said that technology and some of the QAR proposals cutting red tape would help but, perhaps, not enough, leaving much of the task to superannuation funds.
Key Adviser Movements This Week:
- Net Change of advisers, down by (-15)
- Net Change of (-5) for 2023 Calendar YTD
- 15 Licensee Owners had net gains for 17 advisers
- 20 Licensee Owners had net losses for (-33) advisers
- 0 New licensees and 2 ceased
- 3 New entrants
- Number of advisers active this week, appointed / resigned: 59.
Summary
A slower week of adviser movement, with 59 advisers either resigning or being appointed. We also saw the calendar YTD growth drop into the red for the first time in 2023 at (-5). While this is disappointing, at this stage last year we were down by (-755).
Growth This Week
- NTAA via SMSF Advisers Network gained 2 advisers. One from Politis and the other returning to the licensee after a break
- Collins SBA up by 2, one adviser from TPT Wealth and one from Cobalt Advisers
- 13 licensee owners up net 1 each including Viridian, Shartru, Count Group, and Centrepoint who hired two new entrants and lost one adviser.
Losses This Week
- MWL group down by (-8) advisers. At this stage all are showing as ceased
- WT Financial Group, down by (-6). It looks like one practice has left and will soon reappear under a new licensee. Another adviser has moved to Affinia.
- Alteris down by (-2) who have had a small reshuffle across their licensees.
- 17 licensee owners down (-1) each including Castleguard Trust (Lifespan), Diverger, Janus and Insignia who hired 3 including one new entrant and lost 4.
This is a complete nonsense. 12M is an exaggeration, but even if it was genuine, this many Australians could easily be serviced by the existing pool of advisers, even if every single one of them wanted a review every year (which is unlikely). All it would take is 3 meetings a day, 4 days per week.
Workings: Many of the 12M would be couples, so assume the 12M consists of 9M couples and singles. 9M / 15,800 = 570 annual meetings per adviser; 48 weeks x 4 days = 192 days for meetings per year; 570 / 192 = 3 meetings per day.
The problem is not the number of advisers, it is the volume of red-tape and compliance we have to endure, which is unlike anything doctors, lawyers and accountants have to endure. Those who keep pushing this barrow either can’t do basic arithmetic or it doesn’t suit their agenda.