Q: I’m looking for information on an approximate breakdown of how many Australian financial advisers are part of a dealer group, and how many are operating by themselves as individual businesses. I’ve asked
You ask an excellent and popular question. It’s disappointing that it is so difficult to find out the number of individuals who provide such an important service, namely, quality financial advice.
The mystery of how many financial advisers are actually out there has always been a very telling weakness in terms of transparency for an industry that is aspiring to be a profession.
I believe that ASIC has the information available in its records to produce a list of all advisers that could be made available to consumers, and to the industry, but for some reason ASIC has not created such a list.
Fortunately, we have an approximate answer to your question courtesy of one of the many Government reviews into the financial services industry, rather than from the Financial Planning Association.
In November 2009, the parliamentary joint committee of corporations and financial services released a report (known as the Ripoll Report) into its inquiry of ‘Financial Products and Services in Australia’ and within that report provided some interesting statistics on financial advisers. Although 3 years have passed since the report was released, in the absence of more current data, the statistics below provide some guidance on the numbers involved in the financial advising industry.
The Ripoll Report provides some key facts:
- There are just over 18,000 financial advisers.
- These advisers work for 749 advisory groups operating via 8000 financial planning practices.
- The most common method for providing such advice is via one of the 160 or so dealer groups operating in Australia. The largest 20 dealer groups hold around 50% of market share.
- Around 85% of financial advisers (that is, more than 15,000 of the 18,000-odd advisers) are associated with product manufacturers in two ways:
- The adviser works within the dealer group and uses the dealer’s support services
- The adviser is directly employed as an authorised representative under the corporate entity’s Australian Financial Service Licence (AFSL).
From this information (extracted from the Ripoll report, Chapter 2, para 2.4), you can discern that only around 3,000 (18,000 less 15,000) financial advisers in Australia are not associated with product manufacturers (that is only 16-17% of advisers).
In short, the bulk of the financial advisers in Australia are selling product rather than primarily providing financial advice – operating as salespeople rather than true professionals.
It is not clear from the information available, how many of those 3,000 advisers who are not associated with product manufacturers, can be considered independent.
I find it unbelievable that the only list of independent advisers that currently exists is the one that SuperGuide creates and publishes in the article, Financial advice: Only 15 (10 +3 + 2) independent financial advisers in Australia.
Obviously, I am not convinced that there can only be 15 truly independent financial advisers in Australia but until someone builds a comprehensive list of independent financial advisers, this list of 15 is all that consumers can rely upon. Our aim at SuperGuide is to grow this list of independent advisers until we have hundreds (if not thousands) of independent advisers on the list.
If you are an independent adviser (or you are a client of an independent adviser), than I invite you (or your adviser) to consider adding your name to the SuperGuide list. See our article Still wanted: All independent advisers in Australia.
Hi Steve,
I’d like to share my thoughts for what its worth.
A key part of our investment philosophy is keeping fees low. The ‘financial planners’ recommending high cost wrap accounts are often conflicted because they either work for an institution (and so have limited capacity to recommend anything but those high cost products), or they charge a % based fee to ‘manage’ your money. I’d question the value of this myself and consider what you get that fee.
Our retiree clients want to ensure that they can live a comfortable lifestyle in retirement, take regular holidays and spoil the grand kids along the way but ultimately ensure that their money lasts their lifetime without taking too much risk. Through a detailed analysis we show them how much they can afford to spend each year, how much return they need to achieve on their investments and superannuation to maintain a comfortable retirement.
Without this “game plan” in place, retirees fall into the trap of depriving themselves of a comfortable lifestyle or take too much risk with their investments because they worry when they see their capital reduce over time. This analysis shows you the rate that it will reduce over time which gives them greater certainty about the future.
By paying an independent adviser an annual retainer, they can work with you to ensure that you continue to make the most of all opportunities, doing everything you can to reduce risk and protect your wealth and keep you focused and on track so that you keep things simple and enjoy a comfortable retirement and ensure your money lasts your lifetime (and possibly even leave a legacy).
Do you see the value in that?
Hi Trish, thanks for a great site – I’ve got “Retirement for Dummies” and seems I’m going in the right direction. I know you cannot give personal financial advice, but are you able to comment more fully on the need for using a typical financial planner?
I think I read in the book (and can’t find the page now!) that there was little value in formal financial planning if over 60, & getting close to 100% income from an account-based pension, as the tax is zero, and sophisticated financial advice is largely about tax minimisation. I am retiring very soon with about $700,000 (about 600k super payout, and 100k tax free redundancy payment) which I think it wisest to invest in a couple of the best industry allocated pension funds (double diversity). Are there any obvious areas of advantage that would justify the high fees of retail and master fund type income streams that most planners would offer, and the probable commissions too?
Steve