As the financial advice market continues to struggle with finding new supply, a small number of provisional advisers is trickling in each week.
Our analysis shows the number of provisional advisers has doubled in the past six months, but from a very low base. In fact, as the 2021 calendar year draws to a close, there are fewer than 200 listed on the Financial Advisers Register.
To put that into perspective, we have reported the number of ceased advisers has surpassed 3,000 since the start of the year, and in the same period about 120 provisional advisers have registered with licensees. In other words, we’ve seen around 25 adviser exits for every new provisional adviser.
ASIC states that a new adviser can call themselves a provisional adviser when they’ve passed the exam and received authorisation from a licensee to provide retail advice.
Figure 1 – The adviser landscape in 2021
Adviser Ratings is aware of several challenges for provisional advisers. For one, finding supervision, mentorship and support is becoming more difficult in a contracting advice market. Secondly, with some of the biggest licensees exiting the advice space or reducing their presence, we’re told some budding advisers have struggled to find a suitable home.
Figure 2 (below) shows, large licensees, including AMP Financial Planning, Count Financial and Morgans Financial top the table for provisional adviser placements. Again, it’s important to note we are talking about relatively small numbers here.
Figure 2 – Top licensees for provisional advisers in 2021
If we look at where provisional advisers fit in the total universe of licensed advisers (Figure 3), they account for less than 2 per cent of the small and mid-sized marketplace and just over 1 per cent of the bank and diversified space. Unsurprisingly, given broader industry trends, just one provisional adviser was licensed in the limited licensee space this year.
Figure 3 – Proportion of provisional advisers by licensee type
Source: ARdata - Note: Numbers represent the total number of advisers and percentage of provisional advisers.
Finally, when it comes to where provisional advisers are choosing to set up, Brisbane appears to be the city of choice, followed by Melbourne and Sydney.
Figure 4 – Provisional adviser destinations of choice
So, what can we conclude from this data? To begin with, while a small, weekly increase is a promising sign, further intervention is needed to provide work and training for this emerging cohort. With fewer of the traditional opportunities from large licensees available, the industry – which includes licensees, associations, advocates, legislators and fellow advisers – will have to find ways forward for provisional advisers. Without those pathways and assurances, financial advice will become a less attractive profession.