Privately owned licensees soar as advisers leave diversified firms
The proportion of advisers working at a privately owned licensee rose to 78 per cent in the fourth quarter of 2024 as over 1,000 advisers switched from a diversified firm.
According to the Q4 Adviser Ratings Musical Chairs report, it found there are 12,074 advisers working at privately owned licensees, an 8.5 per cent quarterly rise from the third quarter.
Some 4,374 are working at a firm with 100+ advisers, 4,350 at one with 1–10 advisers, and 3,350 at one with 3,350 advisers, representing 78 per cent of the industry.
Wealth Data numbers show there were 15,477 advisers at the end of 2024, a decline of 145 advisers during the 12-month period.
Adviser Ratings noted the majority of the growth at privately owned firms had come from advisers who were switching away from working at a diversified licensee, where almost 1,000 advisers (992) moved licensees during the quarter. This was primarily the result of AMP selling its advice division to Entireti at the end of 2024.
The largest gain went to those with 100+ advisers which gained 833 advisers, followed by 69 who went to a 1–10 firm, and 48 who went to a 11–100 firm.
As for the diversified sector, this fell from 1,646 in Q3 to 654, now representing just 4.2 per cent of registered advisers. Since December 2022, the sector has lost over 2,000 advisers. Looking at the number of practices, the diversified sector fell from 995 in December 2022 to 67.
“This trend of advisers moving to new licensees, which often represent a better fit for their goals and growth plans, is a key dynamic in the industry that stakeholders should be aware of.”
Source: Adviser Ratings, December 2024
All three privately owned licensee categories have risen since 2022 in terms of practice numbers, with the largest gain being a 29 per cent gain from 1,869 practices to 2,423 practices under that licensee in the fourth quarter for privately owned licensees with 100+ advisers.
However, while the licensee may have over 100 advisers, individual practices are far smaller than this with over 1,603 practices in this licensee category having only one adviser.
Smaller gains were seen for practices with 1–10 and 11–100 advisers at 4.6 per cent and 2.4 per cent, respectively, and there were 6,077 practices overall.
While privately owned practices are growing overall, Adviser Ratings predicted smaller practices would consolidate into ones with 11–100 advisers in order to achieve benefits of scale.
“Over time, we see a trend towards consolidating privately owned (1–10) licensee practices into privately owned (11–100) practices as they seek economies of scale with other practices or a way to remove the additional administrative tasks. However, a clear trend in the profession is the shift towards independent, smaller practices that seek licensees who will support a client-centric approach to advice delivery and regulatory adaptation.”
These trends towards consolidation can be described as the rise of “super firms” that excel across their specialisation and scale.
“These firms are not just larger versions of traditional practices; they represent a new advice delivery model that combines specialised expertise and operational efficiency. This means that these firms are not only able to serve a larger client base, but also provide more comprehensive and effective financial advice.
“These firms are pioneering new approaches to client engagement, leveraging technology for efficiency, and creating more meaningful client interactions. And this is only likely to accelerate (and become a more significant differentiator) with the coming regulatory changes.”
AUTHOR
Laura Dew
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