Angus Woods

Australia’s most comprehensive snapshot of the wealth management industry, the Adviser Ratings Landscape Report, shows the advice profession is finally experiencing renewal after years of setbacks.

For the first time in five years, the profession’s numbers are stabilising, with just over 15,800 advisers now working in Australia. For advisers and practices who have stayed the course, many have reported increases in revenue and profitability in the past 12 months.

The in-depth research also illustrates the perception of advice – and its importance in the current climate – is changing, with almost one-in-five Australians willing to pay up to $5000 to see an adviser.

Key findings:

• Almost one-in-five Australians would pay between $2500 and $5000 for financial advice, compared to four per cent last year.
• Supply challenges mean fewer than 10 per cent of Australians are now receiving retail financial advice.
• The median cost of advice has risen a further 5 per cent to $3,710.
• Sadly, 80 per cent of Australians who want advice couldn’t afford to pay what the average adviser charges.
• Adviser Ratings platform leads have hit an all-time high, indicating the growing demand for advice.

Adviser Ratings CEO, Angus Woods, said it’s clear the industry has turned a corner.

“Advisers who have invested in their business and profession are starting to reap the rewards, with high client demand, profitability and a greater menu of tools to help them succeed,” Mr Woods said.

“Australians also recognise advisers play a critical role in planning for the future and managing shorter term financial pressures, particularly at a time of interest rate rises, market gyrations and inflation.

“As Australians face extreme cost of living pressure, the demand for professional advice is set to grow even further,” Mr Woods said. “Advisers are responding by adding to their client load and making material changes to their businesses to improve efficiency.”

The research also examines advisers’ investment and technology sentiment.

“There are clear winners and losers when it comes to platforms and technology, with advisers too time-poor to deal with inferior service.”

The Landscape Report also provides valuable insights into advisers’ intentions for the next 12 months, with succession planning and process efficiencies among the top areas of concern for the coming year.

Also included in the 2023 Landscape Report, and soon-to-be-released Life Insurance Study 2023, are the winners of the 2023 Adviser Ratings Awards, recognising excellence in their respective categories. Those award winners are:

Platforms

• Best Advice Platform – HUB24
• Best Client Experience – HUB24
• Best Adviser Experience – HUB24
• Best for New Advisers – HUB24
• Best Functionality –HUB24
• Best Adviser Support – HUB24
• Overall Investment Options – HUB24

Software

• Best Advice CRM – Worksorted
• Best Advice Software – Product Rex

Life Insurer

• Best Retail Life Insurer – PPS Mutual
• Ease of Underwriting – NEOS Protection
• Best Platform Functionality – NEOS Protection
• Competitiveness of Product – PPS Mutual
• Comprehensiveness of Modules – PPS Mutual
• Best Adviser Support – NEOS Protection
• Best Claims Handling – NEOS Protection
• Most Consistent Retail Life Insurer – Zurich Insurance Group
• Most Improved Retail Life Insurer – TAL

Research House

• Best Research House – Lonsec
• Competence of Personnel – Lonsec
• Quality of Research – Lonsec
• Breadth of Research – Lonsec
• Timeliness of Research – Lonsec
• Best Adviser Support – Lonsec

Read the report.

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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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