Adviser numbers rose for the first time in five years, according to the latest quarterly Musical Chairs report from Adviser Ratings.
In the first quarter of 2023 to 31 March, the report found the adviser universe increased by 24 advisers during the period. This was the first quarter since 2018 that had recorded positive growth.
Some 90 joined the profession and just over 200 ceased, meaning there was one new entrant for every two exits, compared to one new entrant for every 30 exits two years ago.
While 212 ceasing advisers was not an insignificant number, it compared to 327 in Q4 and over 700 each in Q2 and Q3 2022. The peak was seen in Q4 2021 when over 2,200 advisers departed.
Adviser Ratings said: “There were fewer than 300 departures across Q1 and once we factor in new arrivals and previously ceased advisers who have returned, the net number is positive. It represents a new record minimum in the number of advisers leaving the industry on a quarterly basis.
“This follows a relatively quiet Q4 2022, with the remaining advisers who had failed the exam making their exit earlier in the year. It means we are starting to see stability in adviser numbers.”
There was a slight drop in the number of diversified-licensee advisers, which was down 25 advisers on December 2022 but gains were seen in the boutique, privately owned market segment (one to 10 advisers) which was up by 50.
Industry super funds also reported a small gain of six advisers over the quarter, and privately owned firms (100+ advisers) gained 10.
There was a small jump in switching licensee action after a quiet Q4, with just under 500 advisers finding a new licensee. This was not unusual at the start of the year, Adviser Ratings said, as advisers began a new year and set out their growth intentions.
Looking at new registrations, these were tracking at the same pace as licensee discontinuations, and most had between two and five advisers on their books. New registrations were primarily coming from the privately licensed space, but others were from advisers who were previously at a diversified licensee.
However, looking on an annual basis, limited licensees and banks had lost 47 per cent and 26 per cent, respectively, with only small privately owned practices reporting gains over the past 12 months.
Looking ahead to 2023, 90 per cent of advisers said they expected to hike fees as inflation and interest rates affected businesses.
