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 ASIC, FAA and the FPA and I can’t get an answer. Looking through the older ABS stats it also appears that the total number of financial advisers seems to be around 30,000 which seems rather high to me. Would you have any information around this?
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. ASIC now operates the Financial Advisers Register (see link at end of article), but still has not yet disclosed the number of advisers on that register.
Note: As at November 2015, the FPA states on its website says that it has around 11,000 members although there are at least 6 other reasonably large adviser associations which would add a few thousand more advisers to the list.
We can provide 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, or from ASIC. Although the financial advising industry has undergone some major restructuring, anecdotally, the number of advisers has not changed much from the numbers quoted below.
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 several 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, AND/OR 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 still 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 124 independent financial advisers in Australia. This remains the only list notwithstanding that ASIC has the means and information to compile its own list of independent financial advisers, but has failed to do so.
Obviously, I am not convinced that there can be so few truly independent financial advisers in Australia but until someone builds a comprehensive list of independent financial advisers, this list 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, unless ASIC starts to produce its own list.
If you are an independent adviser than I invite you to consider adding your name to the SuperGuide list. See our article Still wanted: All independent advisers in Australia.
For more information on financial advisers, see SuperGuide article Seeking advice? Financial Advisers Register is a starting point.