How many advisers have left the industry?
In Australia there has been a large, ongoing, exodus from the financial services industry. So far, our regulation has brought nothing like the losses seen there. Here are some of the factors we took into account in revising our view – and why it matters.
Wednesday, April 26th 2023, 7:58AM 
2 Comments
by Russell Hutchinson
Getting an accurate view of how many advisers have left the sector is not easy.
The old register of financial advisers was pretty poor – many people and entities were listed on the register but not quickly removed when they ceased to be advisers, therefore the list was huge compared to the number of advisers we expect were actually practicing.
Poor data drove us to hunt for other proxies for the number of active advisers, such as the number of people studying Level Five papers.
But many people study Level Five that have no intention of giving advice. Several of my staff have it, or are in the process of studying for it, because it is a good basis for the work they do in research.
Many insurers have staff with Level Five. On the other hand, some people who will be giving advice will not have Level Five (nominated representatives can meet the educational requirements in other ways, and in combination with systems and processes).
Insurer estimates based on their own agency numbers will overlap for some advisers and undercount others. So, the hunt yields no very good answers.
The FMA’s numbers are the best source of information in this area, and that still has some limitations of comparability with the old register. The numbers of advisers expected to operate in the new environment comes from the application process for Financial Advice Providers.
This was an estimate at a point in time which tells us the total expected by the FAP, not who left and who joined. This is important, based on the FMA numbers there appears to be a very modest net drop in the number of advisers.
That net change could be a large fall in existing advisers and a good number of new recruits, or it could be a small drop, and a very small number of new recruits.
Going forward we will continue to search for ways of measuring the numbers of experienced advisers that leave, and the number of new recruits.
We shall be interested in understanding the success rate of people that join the advice profession and the pathways that they took to join, and how long it takes them to become productive advisers.
That leads us to consider the real reason that we are interested in adviser numbers – we want to get an idea for advice capacity.
We are concerned that we have enough advisers to help New Zealanders get their risks covered by insurance where this is needed.
Capacity is not just about raw numbers. Even though compliance requirements may not have reduced the number of advisers much, it may have affected the capacity of some advisers a great deal – and understanding that means we need information about how much advising is going on.
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Comments from our readers
Which is a long way south of the 4,500 the Sovereign system back in 2002/2003 suggested. With an idea of about 3,000 to 3,500 of them being active.
(Sovereign ran into an issue with hitting the limit on agencies on the system, this is why newer agencies have lower numbers than some of the older (in the industry) advisers)
I would put more credence in the Fidelity numbers today over the old ones simply due to every active agency needs to have a linked and registered adviser and license.
And the only way we’re going to get accurate numbers is with the insurers reporting agencies to the FMA in their returns.
Which is probably why the FMA has stipulated to providers agencies have to match the name on the FSPR, something I have an article in progress on...
We’ll get the data in time
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