Today’s average adviser provides a higher standard of advice than two years ago. Adviser Ratings has been tracking quality for a number of years, particularly as it relates to the role of licensees. The collapse of several high profile licensees / dealer groups showcases the role licensees play in providing quality advice and ensuring no contagion effect occurs across their group, as we saw with the collapse of several large licensee / dealer groups in the last few years.
Following the royal commission and subsequent mass exodus, whilst some high quality advisers have exited the industry, we have also seen a higher proportion depart that had a higher number of complaints, bannings, disqualifications, director impositions and historically being directors of liquidated or phoenixed companies to their peers.
Adviser Ratings has analysed the current market using a number of indicators to assess an adviser’s and licensee’s quality. These metrics have been road tested for the last few years through correlation and causation effect to ensure the right metrics are captured.
Pleasingly, on a beta scale of 300 – 1,200, the quality of advice has generally improved in the last 4 years, with the slight dip in 2021 reflecting some of the exam impositions and a move by certain high quality advisers into wholesale advice.
Chart – Change in Quality of Advice
Source: Adviser Ratings
What does this mean for advisers?
The quality metrics and associated scores are in beta mode and being refined in unison with UNSW and other industry participants to help add value across the ecosystem. Quality is determined by not just quantitative elements, like education, but in time, will be measured by practice efficiencies, level of PI or Cyber cover and consumer outcomes, such as satisfaction levels. As an adviser, the first thing to do is to ensure you either run or work for a reputable and high-quality practice and/or licensee, keep active professional memberships, and meet professional benchmarks. If running or starting a practice, now is the time to ensure you have the right people and processes in place.
As the profession shrinks, the demand for quality advice is ballooning. More and more, consumers and adjacent industries will expect measures to determine both the quality of advisers and their likelihood to see them through retirement.
Improving Quality and Transparency?
This preliminary work builds off change to advisers’ profiles badges announced last year.
With the Quality of Advice Review coming to bear at the end of the year, we earnestly believe the profession will be showcased as a beacon for those looking for advice. Whilst it’s likely technology and social media will play some role in making advice affordable and accessible, we believe they will act as launchpads for today’s adviser - ready to deliver advice to millions of consumers.
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