For most investors deciding whom to invest with is perhaps the most difficult decision. Once a decision has been made the next step is who do they know, who do they trust and how much should they invest.
It is quite common for everyday investors such as mums and dads to take the safety route and invest in a well-established brand. Even institutional investors will do the same but with the advent of 24-hour technology and a willingness of people to do their own research, non-aligned financial institutions are starting to make their way into the homes of everyday Australians.
And of course the more money invested with non-aligned financial service groups, means the number of advisers are growing within these groups, as the tables below show.
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According to ASIC financial data between July 1, 2017 and January 1, 2018 seven non-aligned financial advisers groups increased the amount of advisers within their groups in the top 25.
Six out of seven non-aligned financial adviser groups increased the amount of advisers to deal with the surge of business demand.
SMSF Advisers Network is the exception, as it continues grow strongly by adding accountants that want to provide advice on SMSFs but don’t necessarily want to go under a traditional full-service licensee. Similarly, the GPS Wealth’s growth, which is coming off the back of new advisers, is most likely coming from accountants authorised for SMSF advice only.
Movements
Five of the top six aligned adviser groups all suffered losses in the amount of advisers working for them. It is difficult to pinpoint the sole driver of the reduction in number of advisers, however, it is worth commenting on the variations in the reduction for the top five groups.
AMP Financial Planning arguably the most established financial planning brand also runs AMP Adviser Academy – a well-regarded program for recruiting and training new advisers. The strength of AMP’s recruitment is counteracting the attrition of advisers. AMP Financial Planning also operates a Buyer of Last Resort (BOLR) facility to purchase financial planning business from practice owners as a “last resort”. Under certain conditions, the BOLR arrangement may be advantageous which discourages some advisers from leaving AMP Financial Planning.
In contrast, Charter Financial Planning, which is owned by AMP, appears to be struggling to recruit new advisers to offset the attrition of advisers.
Commonwealth Financial Planning, Count Financial and Westpac all appears to have recruited strongly in the year to July 1, 2017. The reduction in advisers for these three groups may be a result of attrition from the cohort of advisers recruited in the year to July 1, 2017.
Overall, the top financial planning groups remains mostly unchanged with most licensees at the top controlled by large financial institutions.
Emerging from the pack
One notable fast mover in the six months to January 1, 2018 is Macquarie Equities moving from rank 24 at July 1, 2017 to rank 20 at January 1, 2018. Macquarie Equities growth is coming from 60 advisers switching from other licensees during the six months to January 1, 2018. More than 30% of the advisers switching to Macquarie are either from AMP or one of the big four banks. This partly reflects the dominance of the large institutions, as any advisers switching will come from the larger licensees, however, advisers switching may also but may also point to uncertainty in the ownership of advice business of the banks.
Going backwards
Professional Investment Services has experienced a sharp drop in rankings resulting from losing advisers to other licensees and advisers exiting the industry. Professional Investment Services lost 42 advisers between July 1, 2017 and January 1, 2018.
There were eight Professional Investment Services advisers that joined the Australian Advice Network licensee in the 6 months to January 1, 2018. Australian Advice Network is a small licensee with 22 advisers as at January 1, 2018.
Thirty-four advisers have departed the Securitor Financial Group between July 1, 2017 and January 1, 2018. The reduction is mostly attributable to advisers switching out of the Securitor licence and moving to non-institutional owned licensees. There were six advisers under Altitude Financial Planning that became self-licensed in August 2017.
Millenium 3 also experienced a drop in the number of advisers reducing from 329 advisers at July 1, 2017 to 295 advisers at January 1, 2018, mainly as a result of advisers exiting the industry or switching to other licensees.
The number of advisers at industry level is hovering around 25 thousand with a slight reduction in the six months to 1 January 2018. As shown above, the adviser movements at the licensee level varies considerably and will be determined by the licensee’s strategic goals, its ability to recruit and retain advisers, the average age of the financial advisers and other competitive factors.
Data Source
The analysis in this article is based on January 1, 2018 ASIC Financial Advisers Register. We have performed cleansing of the ASIC data to remove any obvious inconsistencies or errors.
Complimentary Licensee briefing
If you are part of a company that holds a financial service licence please contact me for a complimentary tailored briefing that answers the following questions:
- How does an adviser group’s adviser movement rates (new entrants, exits and switches etc) compare against its’ peers and the industry?
- Are your closest competitors adding or losing advisers?
- Are an adviser group’s competitors growing by attracting existing or new advisers/corporate representatives?
- Which competitors are losing market share?
- Are an adviser group’s competitors losing market share due to exits from the industry or losing representatives to competing licensees?
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John Low is Principal of Skilful Analytics, a data analytics consultancy that helps organisations unlock data-driven insights that enhances decision making. Prior to founding Skilful Analytics, John practiced for 18 years as an Actuary applying his analytical skills to life insurance product manufacturing and financial management of life insurance companies. In his free time, John enjoys spending time outdoors with his family as well as running and basketball.
