Younger advisers more likely to depart industry
Of those financial advisers indicating they are looking to leave the industry, three-quarters are advisers aged under 40 which is presenting a problem for future growth.
The report, Advice in 2030: The Big Shift, produced by Deloitte for Iress, surveyed 250 advisers on areas such as their business model, revenue, charging and client base.
Money Management previously wrote about the report’s forecast of adviser numbers expected to be seen working in financial advice in the next five years. It said the number of advisers is estimated to only grow by 1.1 per cent per annum to reach 16,708 by 2029.
On the flip side, it also looked at how many would depart the industry or retire in the next 12 months.
Some 21 per cent of the surveyed advisers said they were likely to switch careers or retire in the next 12 months.
Interestingly, three-quarters of those looking to depart were advisers aged under 40.
This is crucial as it indicates people who, early on in their financial advice careers, do not necessarily intend to stick with it for the long term. Out of all under-40s surveyed, some 26 per cent said they intended to switch careers or retire in the next 12 months.
A quarter of those looking to depart were aged 40 to 55, and 2 per cent were over 55 years old.
During FY24, there were 376 new entrants to the market, according to Wealth Data.
Speaking to Money Management, report co-author John O’Mahony said: “We don’t want to be negative about the sector but it does suggest it is facing challenges with retention and making sure the regulatory requirements facilitate growth of the number of advisers is important.
“How attractive are you making it as a career or a business opportunity? If you aren’t making it reasonably attractive for people to enter, then you won’t have people doing so.
“It points to the need for both policy and industry to explain and facilitate the value proposition of being an adviser and points to the risk of an even smaller cohort of advisers if we don’t take action.
“Work like this [report] which highlights the financial opportunity for advisers but also the opportunity to make a difference to people’s lives is important, that’s what advisers have told us they enjoy about the job.”
Other areas that advisers said they enjoyed about the profession were catering to a more diverse customer base and advice demographic beyond retirement planning and into topics such as home ownership and wealth diversification.
Another factor that makes it concerning is the expected future growth in consumers, with 76 per cent of surveyed advisers anticipating an increase in their client base of 10 per cent or more in the next five years.
Advisers expect to serve an additional 486,000 customers in the next five years, which will lead to an additional $2.1 billion in revenue.
The Financial Advice Association Australia (FAAA) previously stated the industry had a role to play in encouraging new people to join up, particularly at the student level. It recently appointed Louise Trevaskis to the role of head of university and student program to promote the industry to that demographic.
AUTHOR
Laura Dew
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I have no idea why anyone with youth on their side would stay in the industry. There are plenty of other opportunities out there, and the last 25 years has shown the government is relentless in their efforts to crush the financial planning industry.
Hand on heart I couldn't tell a young person to enter this industry at all!
I think the appropriate saying is "can't see the nose on your face" or as Monty Python would put it ; the "bleeding obvious " !
...let's see, $80k wages, $8k, super, phone, computer plus other... let's say $115k total cost to employe. I need $100k return on my investment to make it all financially work, considering back office, rent, reg costs, insurances, professional development and more... These new advisers will be working long hours to keep up their end of the bargain!
Is Jones getting the picture I wonder...???
If we had 10% joining the industry each year that would probably just keep up with 10% exiting each year over the coming decade due to natural attrition.
Ladies and gents, we have a problem..!