Adviser Ratings’ Landscape Report illustrates impacts of falling adviser numbers – with further to go

From

Angus Woods

The Adviser Ratings Landscape Report – the most comprehensive research on Australia’s wealth industry – illustrates how the changing nature of wealth management has impacted financial advice, funds management, and consumers.

Based on six research projects undertaken across five months and involving more than 40,000 surveys of financial advisers and consumers, the Landscape Report clearly shows how the financial advice and wealth management industries continue to evolve through ongoing regulatory and market disruptions.

Key findings include:

  • 100,000 either ceased receiving advice or were orphaned by their adviser, as advice affordability became more of a concern
  • only 1,200 risk specialist advisers remain in the industry
  • there are 5.6m unadvised Australians looking for professional advice, with five per cent of consumers indicating they get all their advice from social media
  • the average median cost of advice has increased a further eight per cent to $3,256
  • 234 licences were discontinued in 2021 – the largest number since tracking began in 2015
  • there has been a 50 per cent increase in the past four years of advisers partnering with super funds, as super funds become the next frontier for consumers looking for affordable advice.

With Adviser Ratings predicting the departure of a further 2387 advisers from the industry in 2022, the cost of advice and the number of orphaned clients look set to grow.

“The advice industry has been in a state of flux for a number of years, and we continue to see that change today,” Adviser Ratings CEO, Angus Woods, said. “Through our research we go deep inside the evolution of advice and funds management. We look at how it is responding to consumer needs and analyse the penetration and sentiment towards the technology that underpins the industry.”

There are 100,000 fewer customers of financial advice today and 3,323 fewer advisers compared to 12 months ago, with the median cost for advice increasing another eight per cent, to $3,256. This has coincided with a general improvement on the standard advice, with the Adviser Ratings Adviser Quality Score (AQS) increasing from 678 at the end of 2018 to 707 at the end of March 2022, based on a score out of 1,200.

To service clients more effectively and efficiently, research indicates that financial advisers intend on using investment platforms more in 2022, with pure platform plays and listed companies Hub24, netwealth and Praemium expected to be the winners.

Advisers also intend on meeting evolving client needs through their services, with more than 50 per cent aiming to increase ESG exposure through the year, for example.

“The advice and wealth management industries continue to evolve, and the impacts across the board, from product providers through to consumers, is significant,” Woods said. “Our research asks many questions on how Australians will receive advice in the future, and who will advise them. There is more change to come.”

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