The decline and fall of limited advice accountants

Accountants remain a crucial part of the financial planning industry but limited license accountants are now a rare breed as a result of both commercial reality and very often their failure to pass the Financial Adviser exam.

While the latest data from the Australian Securities and Investment Commission’s Financial Adviser Register (FAR) shows relatively modest adviser exits over the past week, this is regarded as disguising the number of notifications currently in progress to ASIC, particularly among limited advice accountants.

According to Wealth Data principal, Colin Williams exiting advice at the same time as closing down even a limited license is complex and this is combining with COVID-19 conditions and the new calendar year to disguise what might be really happening.

“We suspect that many licensees, mostly those in the peer group of Accounting – Limited Advice (mainly accountants providing SMSF Advice under a restricted licence) are yet to report,” Williams said.

“A large number are very small licensees will need to remove themselves as the adviser(s) and close the licence,” he said. “This may be more complex for some than first anticipated.”

Williams believes that the level of adviser exits is likely to accelerate and this will become more noticeable at the close of the month.

According to the latest Wealth Data analysis, these are the key movements for the past week:

Net Change of advisers (-49)

22 Licensee Owners had net gains for 33 advisers

46 Licensee Owners had net losses for (-81) advisers

3 new licensees commenced and (-8) closed

2 Provisional Advisers (PAs) commenced.

Summary

The net loss this week of (-49), took the net number of advisers down to 17,621. This is less than the 17,200 we have previously forecasted. We suspect that reporting of the data is taking time to work through ASIC because of holidays and Covid

We also suspect that many licensees, mostly those in the peer group of Accounting – Limited Advice (mainly accountants providing SMSF Advice under a restricted licence) are yet to report. A large number are very small licensees who will need to remove themselves as the adviser(s) and close the licence which may be more complex for some than first anticipated.

To put this into context, there are 258 ‘one adviser licensees’ and 50 ‘two adviser licensees’ in this peer group and they had some of the lowest FASEA Pass rates when this data was available.

Growth This Week

Licensee Owners. The two largest growth firms for the week are two new licensees with 4 advisers each (Not shown, for details, please call or email us). Another small firm, Radius Wealth was up by 3.

Centrepoint continue their growth up a net 3 advisers with 2 from CBA and 1 from Interprac. ASVW also still on the up with 2 advisers and have grown by 21 this financial year.

Losses This Week

CBA, Consilum and Insignia (IOOF) all down by a net (-7). Synchron down by (-4) and 4 groups down by (-3) including AIA and WT Financial Group 6 firms down by (-2) and 32 down by (-1).

Year To Date Data

If we change the date back to Jan 1, 2021, we can see that the loss of advisers ticked over 3,000 to (-3,017) as of January 20, 2021.

The largest group is Insignia with 1,239 advisers followed by AMP Group at 1,111. AMP Financial Planning is the largest licensee at 595 followed by SMSF Advisers Network at 544 and in third position, Morgans financial with 446 advisers.