The EOFY Dip: Adviser Numbers Drop Again

After a mostly stable year, hundreds of advisers exited the industry in the month of June – a trend that’s broadly in line with what we’ve seen in the past.  

With 275 departures, June was the busiest month for industry farewells since September last year, which was just before the exit deadline for advisers who had twice failed the professional standards exam. Across the most recent financial year, there were more than 1700 exits, a third of which happened in September.

Figure 1 – Adviser movements by type



Source: Adviser Ratings

Once again, limited licensees and banks said goodbye to the highest proportion of advisers across the financial year, as both segments continued their evaporation. Limited licensees lost 48 per cent of their advisers, while banks lost 27 per cent.

While no licensee segment increased its numbers over the 12 months, the large private licensee market (100-plus) shrank by only 2 per cent. Collectively, privately-owned boutique, mid-size and large licensees now oversee more than two-thirds of advisers.

An outlier or a trend?

In the past, the rate of departures in June has been slightly higher, as advisers have looked to avoid the Australian Securities and Investments Commission levy on licensees. The levy is estimated to rise to more than $1500, plus $3200 per adviser, this year, the regulator has stated.

This year’s June adviser exits follow several months of very quiet activity. In January, just 46 advisers left – almost the same as the number of new entrants. In fact, the past financial year is the first one we’ve seen since 2018 in which monthly exits have typically been in the dozens, rather than hundreds.

Given these trends, we expect numbers to continue to stabilise and hover around the 15,000 mark, especially as some advisers are buoyed by the more positive Quality of Advice Review changes.

Earlier in the year, our survey data revealed almost four-in-five advisers intended to stay in the profession after completing the bulk of their requirements and investing in their practices. A further one-in-10 said they were unsure, with many in that camp awaiting further word from the government about the Quality of Advice Review implementation.

In the weeks following the release of Assistant Treasurer Stephen Jones’ roadmap, advisers have shared mixed reactions to the reforms. Positive sentiment has been expressed towards efforts to reduce the compliance burden and duplication, while there has been skepticism and concern from some advisers about plans to allow non-relevant providers to offer advice.

When it comes to new arrivals through the financial adviser pathway, we’re still seeing more of a trickle than a flood. Across the financial year, 366 new advisers were added to the Financial Advisers Register. As such, the ratio of exits to entrants is still close to 5:1.

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