The exam cliff: 450 experienced advisers gone in 2 weeks

Mike Taylor

Managing Editor and Publisher

7 October 2022

The long-predicted financial adviser exam ‘cliff’ has been reached with 450 experienced financial advisers exiting the Financial Adviser Register (FAR) over the past two weeks with more significant departures expected in the week ahead.

The latest analysis of the FAR reveals a net loss of 444 over the two-week period, with 149 departing last week and 295 falling off the register this week.

And while many of the adviser exits are attributable to the 48% pass rate registered from the last adviser exam, WealthData principal, Colin Williams said he believed the numbers also reflected the reality that a number of advisers had simply never sat the exam and had ‘gamed’ the exam time-line extension to remain in the profession.

Williams said it was likely a significant number of exits from the FAR would be recorded next week as smaller licensees brought their records up to date.

While 28 advisers working under the AMP umbrella exited the FAR, the data revealed that a further 22 advisers were lost to the National Tax Accountants Association, bringing to 393 the number of advisers lost to the license over the past 12 months.

Key Adviser Movements This Week:

Net Change of advisers (-295)

24 Licensee Owners had net gains for 31 advisers

114 Licensee Owners had net losses for (-326) advisers

6 new licensees commenced and (-8) ceased

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

Summary

This week’s loss of (-295) was large and when combined with last week’s loss of (-149), the net loss over two weeks is now at (-444). The losses have been driven by the need to pass the Financial Adviser (FASEA) Exam for those advisers who were given an extension to Sep 30 this year.

We believe there are some more losses, but not as heavy to come over the next couple of weeks before flattening out. As a reminder, licensees have up to 30 days to report losses and with the current run of public and school holidays, reporting may be lagging a little.

Growth This Week

A very low number of licensee owners with net growth this week at only 24 and 6 of them are new licensees. PSK grew by net 6 with all advisers moving across from Charter (AMP Group) to the PSK AFSL. Note: PSK purchased the Ipac business from AMP and have renamed the AFSL to PSK. PSK also have a large team of advisers operating under the Charter AFSL.

Two new licensees commenced with 2 advisers each. One commenced with advisers from PIS (Centrepoint Group) and the other with advisers from Synchron (WT Financial). A tail of 21 licensee owners up by a net 1 adviser including the remaining 4 new licensees.

Losses This Week

Significant losses this week with AMP Group suffering the heaviest net loss of (-28). Lost (-30) advisers and gained 2. AMP Financial Planning lost (-17) and gained 2 for a net (-15) and Charter lost (-13). Other than the 6 advisers that went to PSK, none of the remaining advisers have been appointed elsewhere to date.

NTAA (SMSF Advisers Network) down (-22). This licensee offers limited / restricted advice for SMSF clients and were hardest hit at the end of last year, when many advisers ceased on the FAR in December. To put that into perspective, NTAA is down (-393) over 12 months.

Bell Financial (Bell Potter) down (-20) and Morgans down (-16). Both firms are in our Investment Advice business model (peer group). Over 12 months, Bell Financial are down (-48) and Morgans down (-39).

WT Financial Group down (-14) with their licensees Synchron down (-8), Sentry (-2) and Wealth Today (-4). Financial Link down by (-12) and suffered more than most on a proportional level over the last 12 months, down (-38) or (-44%). Sequoia down (-10) and Insignia down (-8).

The 8 licensees that effectively closed had net combined loss of (-11) advisers.

WealthData and Financial Newswire form the Wealth Division of FST Media.