Could the advice profession return to 25k advisers?
The introduction of financial advice from superannuation funds and banks could see adviser numbers grow to as much as 25,000 in the future.
Under plans in the Delivering Better Financial Outcomes legislation, based on recommendations by Michelle Levy made in the Quality of Advice Review, Minister for Financial Services Stephen Jones proposed plans for a new “qualified adviser”.
While the name is expected to change, the idea will see simple advice provided to consumers at banks, insurers and superannuation funds.
The proposal has received a mixed response from the industry around what education it will require, but executive manager and financial adviser Chris Garlick of Guideway Financial Services said it will be a good way to boost adviser numbers.
Adviser numbers have fallen from a peak of 28,000 pre-Hayne royal commission to just over 15,000 as advisers opted out of high compliance and educational requirements. While the industry is seeing new entrants joining the profession, this is not happening at a sufficiently fast rate to counteract the exits.
In 2022, 357 joined the industry followed by 403 in 2023, compared to just 30 advisers who registered on the Financial Advisers Register in 2019.
Garlick said: “It’s not so hard to imagine that [the industry] would get to the point where we're looking at somewhere between 22,000 to 25,000 advisers easily over the next few years.
“If banks re-enter as well, it’s quite easy to expect by 2030 that [advice] will go back to being 50/50 or even being more bank-favoured where they’re paying the most fees before the typical retail adviser. That would be ideal for everyone at the end of the day, so everyone is on a level playing field.”
He believes the qualified adviser idea is an important step in the right direction, even in the face of adviser criticism and concern about their qualifications.
“With a record number of people coming up to retirement, there’s a massive slice of the pie available with plenty of clients to go around for super funds and retail financial planning businesses. Even with qualified advisers, this will still be people with unmet advice needs.”
Last year, Jones told in a Financial Services Council event that he would like to see the industry return to 30,000 advisers and hinted at the introduction of advice from superannuation funds.
“People don’t decide at the age of 18 that they want to become a financial adviser or when they are an undergraduate. It is people who have worked in a bank or as an accountant or who have studied a commerce degree and then decided they want to do advice.
“There is a pathway to growing those 16,000 advisers to 30,000, again, but we won’t get there in two years’ or five years’ time. We have to be pragmatic about it and have more doors at the university level, such as by recognising components of other degrees and ensuring there is a logical pathway.
“A benefit, but not an objective, of looking at [super] fund-based advice and getting that scope of competence for the people providing that advice is you get that natural pathway. A natural pathway that we don’t have at the moment.”
AUTHOR
Jasmine Siljic
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