Support needed to encourage advice firms to hire
Support is needed for advice firms to encourage them to hire Professional Year advisers as those that are entering the industry are not offsetting those that are leaving, according to Wealth Data.
While Wealth Data showed a recent surge in new and professional year advisers, as evidenced by running totals in the chart below, numbers were well short of where they needed to be.
Back in 2018 when the rules for hiring new advisers were announced, there was a clear advantage for any person wishing to be an adviser to get onto the Financial Advisers Register before the end of the year, Wealth Data’s Colin Williams said.
But the chart below, which highlighted the year-on-year change in adviser numbers, showed that 2019 was when things took a turn for the worst, recording a net change of -4,436 advisers.
Williams said a few hundred new entrants each year was great, but it was not offsetting the amount of people leaving the industry.
He said if the assumption was made that 5% of advisers would drop out each year for any reason, be it retirement or sickness for example, then that would mean the industry would see 850 advisers leave based on the current figure of 17,000 advisers in the industry.
“To rectify this issue, support will be needed to encourage firms to hire provisional advisers,” said Williams.
“In the past, the banks were very much the nurseries for new advisers and to date, no major business or group has tried to fill the vacuum left after the withdrawal of the banks. Firms should also look at advisers who exited recently who could well come back in.”
While it was positive to see a good number of ex-Commonwealth Bank of Australia (CBA) advisers being hired in recent weeks, Williams said, the other issue was getting young people excited about becoming an adviser.
“All the bad media around financial advice has obviously not been helpful.”
AUTHOR
Liam Cormican
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