Following a 43% decline in financial advisers since December 2018 and a projected 17% increase in the number of pre and post-retirees (individuals aged 55 to 84 years) over the next decade, there is a mismatch that may leave many missing out on crucial financial advice.
Research from Rainmaker Information’s Financial Adviser Report suggests that there maybe a silver lining, indicating that the number of advisers may be bottoming out, as both the quarterly and rolling 12-month changes in adviser numbers are converging toward zero.
Despite these signs of stability, Rainmaker Information’s projections anticipate that adviser numbers will remain within the range of 15,000 to 18,000 by the end of the next decade.
"These projections affirm our view of the Quality of Advice Review's anticipated positive impact on the industry,” said Alex Dunnin, executive director of research and compliance at Rainmaker Information.
“However, it is important to note that even at the upper end of this range, adviser numbers may barely keep pace with expected consumer demand."
In stark contrast to the decline in adviser numbers, the number of Australian Financial Services Licenses (AFSLs) has fallen at only half this rate, dropping by 18%.
This data underlines a concerning disconnect between the licensing of advisers and the number of practitioners in the field.
"If these adviser numbers fall toward the lower end of the range, we risk facing a severe per-capita shortage of advisers available to serve the needs of pre and post-retirees.”
“The industry faces a critical challenge to ensure that the growing demand for financial advice is met adequately."
“Australia's financial advice industry must remain agile and proactive in finding innovative solutions to bridge the adviser shortfall, ensuring that financial advice remains accessible and reliable for all Australians,” said Dunnin.
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Superannuation fees have fallen 2% over the last financial year to reach to 0.93% per annum, the lowest total expense ratio on record.
Australia’s financial adviser numbers have stabilised at 16,000 and is projected to climb, but this may not be enough to avert a supply shortfall.
