The number of people licensed as financial planners fell by 1217 in the June quarter – a 4.8 per cent fall in overall adviser numbers.
According to a review of the financial adviser sector by Adviser Ratings, the number of people licensed to provide advice has fallen to 25,470.
In addition to declining numbers, there has been a lot of movement in the sector, with adviser movement between licenses increasing 20 per cent.
For advisers switching to a new licensee, the “overwhelming preference” is to move to larger privately-owned licensees. Advisers at privately owned licensees now account for 55.4 per cent of total advisers, up from 54.9 per cent in the March quarter.
Among advisers working for privately owned licensees, the biggest cohort (26.7 per cent) are part of licensees with 30 or more advisers.
The service offerings of the potential licensee play a key role in the decision-making process when advisers are moving. Important considerations include compliance support and product choice.
“Vertical integration and restricted APLs are on the nose,” Adviser Ratings says.
The review says a big part of the reasons for the decline in adviser numbers is the impact of the new FASEA regulatory regime, which the industry is still adjusting to.
Adviser Ratings says: “We expect new adviser authorisations to slowly increase in the next 12 months, as more advisers start sitting the new FASEA exam., along with more new advisers fulfilling the professional year obligation.”
Another factor in the June quarter fall is that there were about 4500 planner registrations at the end of last year, ahead of the introduction of the FASEA requirements on 1 January.
Since the start of the year 2825 advisers have left the industry.
“We would expect this trend to continue, with limited new entrants and a constant trend of leaving advisers,” Adviser Ratings says.
The exodus of advisers will continue up to 2024, when all licensed advisers must have achieved the bachelor’s degree (or equivalent) educational requirement.