Accountants who flooded into the financial advice market a few years ago have been just as quick to exit, with fewer than 500 remaining under the limited licensee model.
In the 2021 calendar year, the volume of limited licensed advisers fell by 48 per cent, from 936 to 489. At the same time, the number of limited licensees has fallen to 339, from more than 600 in 2019.
Meanwhile, another destination of choice for tax professionals – the privately-owned SMSF Advisers Network – now licenses fewer than 300 people.
It comes as the overall adviser universe continues to contract, with 16 per cent of advisers departing in 2021 and adviser numbers falling below 20,000 for the first time. Adviser Ratings recently tipped the workforce would fall as far as 12,000.
A rapid rise and fall
The shrinking accountant footprint is a stark contrast to the situation in late 2018, when almost a tenth of the 25,000-strong adviser universe was made up by accountants. The frenzied push into the limited licensee space followed the 2016 repeal of the accountants’ exemption, which had limited the way accountants could advise on starting or closing a self-managed superannuation fund (SMSF) without a licence.
However, just three years later, the pressures from increasing operating costs and professional standards have become too much for many accountants, who saw SMSF advice as just one part of their overall business objectives, Adviser Ratings has been told.
Last year, a number of accounting groups were among those calling for the Australian Securities and Investments Commission (ASIC) to ditch its planned levy hike. Although ASIC offered a reprieve, accounting bodies say pressures on their advising members continue to mount.
Table 1: Top limited licensees, by adviser numbers
Limited licensing ‘unworkable’
In fact, the Chartered Accountants of Australia and New Zealand says the current licensing model has become “unworkable” for its members.
Specifically, the body said multiple licensing and registration requirements and education standards have made it too costly for advisers to provide – and clients to receive – advice.
It has suggested replacing the limited licensee model with what it calls a “strategic advice model”, which would allow suitably qualified professionals to give scaled and strategic advice (decoupled from products) without an Australian Financial Services licence. The idea has been pitched to government, including Treasury and Financial Services Minister Jane Hume.
Although there are now fewer than 500 accountants advising under limited licensees, the association said earlier this year it expects many of its members to consider cancelling their AFSL, given the December 31 deadline for passing the adviser exam.