Clock ticking on exam failure adviser exits

Mike Taylor

Managing Editor/Publisher, Financial Newswire

16 September 2022

The ugliness of the 48% fail rate for the last financial adviser exam has yet to show up on the Financial Adviser Register (FAR), making it inevitable that adviser exit numbers will increase dramatically through the remaining weeks of September and into October.

Defying expectations of an immediate negative impact on the FAR, the latest analysis from WealthData has pointed to growth in adviser numbers, largely driven by licensees registering provisional advisers.

The recent upturn in the registration of provisional advisers appears to be directly corelated to a downturn in the level of adviser churn between licensees.

The relatively slow pace of recruitment of provisional financial planners is owed to two key facts – the past availability of financial advisers exiting the banks and the time taken for provisional advisers to generate meaningful client revenue.

The reality for financial planning licensees is that employing provisional advisers is less commercially attractive than is the case for accountants employing graduates, simply because of the rules around the provision of financial advice.

This was made clear by Infocus Wealth Management, managing director, Darren Steinhardt during Financial Newswire’s Quality of Advice Review roundtable when he said that could take 9 to 12 months on the job before provisional advisers began making a meaningful contribution to earnings.

However, the latest analysis from WealthData points to licensees reaping the benefits of taking on graduates as provisional advisers up to a year ago and the height of adviser churn, particularly involving the mid-size licensees looking for growth.

WealthData has produced an analysis of the business models most responsible for employing provisional advisers, with accounting-based practices to the fore.

Key Adviser Movements This Week:

Net Change of advisers Plus 3

38 Licensee Owners had net gains for 47 advisers

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

4 new licensees commenced and (-4) ceased

14 Provisional Advisers (PA) commenced and (-1) ceased.

Summary

Another strong week for new Provisional Advisers being added to the ASIC FAR, a total of 14, making it a total of 39 for the past 2 weeks.

Financial year to date, the numbers are still positive at 130. At this same point last year, the growth was exactly zero. We are expecting losses to flow through over the coming weeks as advisers who have failed to pass the Financial (FASEA) Exam are withdrawn from the ASIC FAR.

Growth This Week

Spark Partnership have grown by 3, with advisers joining from Crown Wealth Group.  Australian Advisory also up by 3 with advisers switching across from IQ Financial (Note: 1 Adviser still authorised at IQ Financial).  5 licensee owners had net growth of plus 2 including 2 new licensees. A tail of 31 licensee owners with net growth of 1 including 2 licensees reappearing after the adviser dropped off in Dec 2021. Fiducian, Highfield Group Centrepoint and Count all up by net 1.

Losses This Week

Insignia lost a net 8 advisers, 3 from RI Advice, 3 from Consultum and 1 from Godfrey Pembroke, none are currently showing as authorised elsewhere. Diverger, Sequoia and United Super all down by (-3). 5 licensee owners down by (-2) including Castleguard (Lifespan), Oracle and one closed licensee. A tail of 20 losing a net (-1) each including Shartru, Oreana, Fitzpatricks and the remaining 3 licensees.

The licensee that closed only had the 1 adviser.

Calendar  Year to Date

Count is out in front with net growth of 37 followed by ‘newbie’ MBS Advice at 18 and in third spot is PSK with 16. As for losses, Insignia are down (-162), AMP Group next down (- 108) and Craigs Investment Partners at (-66).