Non-aligned advisers emerge from fog of numbers
AMP and the big four control even less of the wider market than first revealed by Money Management and far short of the 80 per cent ownership figure often spoken about in mainstream media, Jason Spits writes.
One year ago Money Management declared on its front page that the domination of financial planning by the banks was a myth.
A careful examination of the Top 100 Survey data gathered for 2014 found that AMP and the big four banks — ANZ, CBA, NAB and Westpac — collectively held just under 60 per cent of financial planners in the Top 100.
While that may appear as a dominant position the 2014 Top 100 Survey data covered around 15,000 planners and not the total group of planners operating within the wider financial advice sector. Estimates of that number varied widely from around 18,000 to more than 22,500, which would further dilute the position of those five groups.
The issue became even clearer earlier this year when the Australian Securities and Investments Commission (ASIC) released its Financial Adviser Register (FAR) detailing the names and licensees of more than 22,500 registered as ‘financial advisers' according to benchmarks set by ASIC.
What the FAR revealed is that AMP and the big four control even less of the wider market than first revealed by Money Management and far short of the 80 per cent ownership figure often spoken about in mainstream media.
This year's Top 100 once again confirm that fact with AMP and the big four banks licensing 8730 planners or 57.2 per cent of the Top 100 which is a decrease on the 2014 Top 100 figures of 300 planners or about two per cent of planners in the survey set.
Adding in the remainder of institutions which licence advisers produces a total institutional ownership figure of 10797 or 70.7 per cent of planners within the Top 100 compared with last years figure of 10851 planner or 72 per cent of planners in the Top 100 survey set.
Placing this in the wider context of all financial planners operating in Australia and listed under the FAR changes the mix substantially (even though the FAR is not a perfect register — see Advice needs to be defined before it can be counted).
It also effectively destroys the myth of institutional domination of financial advice.
The ASIC FAR and Money Management Top 100 Survey data both point to a level of total institutional control in the entire planning sector of around 50 per cent of advisers with control by AMP and the four major banks at around 40 per cent of advisers. (Variation of 1-2 per cent exists between the two sets as the Top 100 was counted to the end of March and the closest matching ASIC numbers were released in mid-May).
Where the ASIC FAR data adds to the Money Management Top 100 Survey data is by defining the total number of advisers at around 21,500 spread across 1200 Australian Financial Services Licence holders.
AMP and the major banks hold 24 of those licences with 8730 advisers while another 17 licences are held by institutions, with a total of 2067 planners under those licences totalling around 10700 planners, or about 50 per cent of advisers in the register operating under institutions.
The FAR also indicates there are around 3000 planners working under licences that have 10 planners or less, around 5300 planners working under licences that have 11-100 planners and 14200 working under licences that have 100 or more advisers.
So why is the issue of ownership so important within the financial planning sector?
Partly it is because common perceptions around ownership hide the true numbers of financial planners who are small business operators working independently of an institution, or even under an institutional licence but often far from the big end of town.
At the same time the over-inflated numbers that have surrounded the institutions have created a false impression that advice is the plaything of banks, fund managers and insurers.
Given these organisations have been under the microscope at commissions, inquiries and reviews creating some clarity around the true number of financial advisers, who their employers are and who is actually entitled to be called a ‘financial adviser' is an important stake to place in the ground.
Top 100 Institutional Ownership
|
Institutionally Aligned Groups in MM Top 100 |
Adviser Numbers - 2015 |
|
AMP aligned groups |
3067 |
|
ANZ aligned groups |
1453 |
|
CBA aligned groups |
1510 |
|
NAB aligned groups |
1475 |
|
Westpac aligned groups |
1225 |
|
Total 'AMP and Big 4' |
8730 |
|
Percentage of Total Advisers in MM Top 100 |
57.2 |
|
Percentage of Total Advisers across sector |
40.6 |
|
IOOF aligned groups |
883 |
|
Other aligned groups |
1184 |
|
Total Aligned Advisers in MM Top 100 |
10797 |
|
Percentage of All Advisers in MM Top 100 |
70.7 |
|
Percentage of Total Advisers across sector |
50.2 |
See also:
- Planner numbers settle after turbulent year
- Advice needs to be defined before it can be counted
- Service providers win adviser loyalty
AUTHOR
Jason Spits
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