Where do advisers go when an AFSL closes?
Research by Wealth Data has found exactly half the number of advisers who have worked at closed AFSLs in the current financial year remain on the ASIC FAR.
In recent years, one AFSL has closed for every two that commence, with 54 ceasing in the current financial year to date compared to 101 commencing over the same period.
Based on the 46 ceased AFSLs which started the financial year with five or fewer advisers, some 75 advisers were affected by the closure.
Breaking it down further by business model, 63 per cent (29 AFSLs) sat in the financial planning model, with 70 per cent (53) of advisers affected working in this model.
Out of the total 75 advisers, Wealth Data found 38 remained listed as current on the ASIC Financial Advisers Register (FAR). This represented an equal half of the total affected advisers and it added that 24 of the 38 were in the financial planning model.
Founder Colin Williams said there is a tendency for those advisers who previously worked in a small business to move across to another smaller one.
Some 26 advisers now work in AFSLs with less than 20 advisers, with 10 specifically working in a micro firm with between one and five advisers. Only 12 are now working at firms with 20 or more advisers.
Recent AFSL closures include NextGen, which was cancelled at the end of February, and Crown Wealth which lost its AFSL in March after going into voluntary administration. Troubled investment firm Endeavour also lost its AFSL in March as it was in liquidation, but this liquidation took place in 2019.
In addition, Indie Advice, Suetonius Wealth Management and Brava Capital – which are all based in Sydney – have also had their AFSLs cancelled.
Between NextGen and Crown Wealth, they represented net losses of 81 advisers.
NextGen had as many as 100 advisers back in 2019 and just under half that at the start of 2023, but the final three departed in March following the ASIC AFSL cancellation.
Crown Wealth had 36 advisers at the start of 2024 – most of the advisers who left (15) joined Focused Financial Advice, seven joined Alliance Wealth, and six joined Lifespan.
AUTHOR
Laura Dew
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