With one adviser exam sitting remaining before the 30 September deadline and only 318 candidates passing in total this year it’s likely the post-deadline exodus will be close to four figures according to Wealth Data.
As of last week there are currently 16,535 advisers left on the FAR and earlier in the year ASIC said 882 advisers qualified for the exam extension.
Wealth Data director Colin Williams tells Professional Planner it is expected there will be losses after the 30 September deadline although licensees will have 30 days to deregister any of their advisers that haven’t passed the exam.
He estimates the number is closer over 1,000 because many advisers will leave advice even after passing the exam.
“My estimate is that many of these financial advisers decided they can’t pass the exam or they won’t try the exam. It’s probably convenient for many of them to hang in there as long as possible to earn an income. I suspect many of them are experienced advisers and they’ve found someone to buy their book.”
Because of the low turnout during the first two exams Williams expects this plan has been in the works for a while and these businesses are slowly transferring clients.
“I suspect there will be quite a number of those and that’s good for the buyer as well because trying to find a financial adviser to service them is pretty hard so that gives them breathing space to find a means to service these clients.”
Williams says he expects another significant loss at the end of the financial year; a year ago the industry saw 549 depart.
“That’s what happens normally and then you get a bounce in July. A lot of people make the decision to leave and 30 June is a god time to do that, then fall off the register and then they come back on during the course of July. It’s quite hard to leave a licensee so normally it’s planned out.”
Williams says the feedback he received from advice practices right now is that they are all flat out.
“They are busy with all this admin to catch up with and all these clients, so if you could extend it from 30 June to 30 September a lot would do that. There will still be a lot going at the end of June, what we’ll see more of in June is experienced advisers leaving larger licensees and then starting up their own AFSLs.”
Heading to new lows
A poll conducted by Professional Planner last year found a majority believed the industry would fall below 13,000 advisers.
Adviser Ratings predicts the industry will reach 12,271 advisers by the end of 2025, coinciding with the education standard deadline which requires advisers to attain a relevant tertiary qualification.
By the end of the year, it expects numbers to reach 14,964, despite over 15,600 having passed the exam.