Where have all the financial advisors gone?

Updated 25/11/2022

Where have all the financial advisors gone?

Financial advisors are still around, but there are less of them, and they cost a bit to use.

Time to read : 4 Minutes

Where Have All The Financial Advisors Gone?

When the Financial Adviser Standards and Ethics Authority (FASEA) was set up, an entire industry changed overnight – some would say for worse, others for better.

🎯 The regulatory body took aim at unscrupulous operators and created a mandatory exam intended to raise the education, training and ethical standards of financial planners and advisors.

🚀 But that resulted in more than 10,000 professionals fleeing the sector.

In the wake of strict education and training rules in financial services, thousands of advisors have fled the industry in recent years.
By the end of 2023, experts say there will only be around 13,000 financial advisors in Australia.
While the industry is unhappy with these changes, consumer groups say it’s a good thing for Aussies seeking quality advice.
While there are helpful free services like Moneycare, good financial advice could still be well worth paying for.

More regulation means better-quality financial advice

While FASEA has since been wound up and replaced by ASIC’s Financial Services and Credit Panel, the body immediately made its mark by forcing those in the industry to either take – and pass – a financial advisor exam or give up their practice.

While many in the industry were firmly against FASEA due to confusion around the new ethics rules, it’s safe to say it drove out plenty of dodgy practitioners who would otherwise be giving regular Aussies poor financial advice.

🏃🏽‍♀️In the space of just a couple of weeks (23 Dec 2021 – 13 January 2022) more than 600 advisors left the industry as a result of the FASEA exam.

📝 After recommendations from the Hayne Royal Commission, FASEA was shut down and ASIC’s powers were extended in order to establish a single disciplinary body for financial advisors.

👨🏾‍⚖️ ASIC has taken to its new role with force, cracking down on financial advisors and their licensees in order to stamp out unethical practices in the financial advice sector.

Beware collateral damage: While it’s true that stricter standards have forced countless inexperienced practitioners to give up their financial advisor roles, it also risks tarnishing the reputation of many highly qualified financial experts.

👴🏾 That’s why some experts are calling for older advisors to be grandfathered in – or we risk losing their expertise forever.

Quality new services are popping up

Good financial advice is worth its weight in gold, but just a single piece of bad advice could ruin your life.

🌈 The good news is that with tougher standards around financial services, it’s creating a market where more free services can be delivered to everyday Australians.

The Salvation Army recently launched Moneycare – a free and confidential financial counselling service available to anyone and everyone.
The Salvos have consistently tried to help everyday Australians who are struggling financially, especially with modern problems caused by buy-now-pay-later (BNPL) loan schemes.
While the Salvos’ service is free, that doesn’t necessary mean it’s the best advice you can get. There are plenty of high-quality financial advisors out there who can help you generate wealth.

Steps to find the best financial advice

A free service like Moneycare is a helpful tool – but it’s just one piece of the puzzle.

People across all walks of life have their own unique circumstances and their own unique financial struggles.

🔍 That’s where a financial advisor can help – by understanding your situation and delivering relevant advice, rather than broad strokes.

Here’s a few quick steps to finding quality exceptional financial advice:

Prepare everything in advance – organise your household budget, calculate your assets, write down your financial goals and clarify how much of a risk-taker you are.
Do your research – don’t just choose the first name that pops up in Google. Reach out to several different financial advisors or organisations and meet with them individually.
Vet the experts – request that they provide you with their Financial Services Guide (FSG) – then read it!
Ask the tough questions – have them answer questions around the specific services they can provide, any limitations to their advice, as well as who they represent (e.g. certain lenders).
Cover yourself – ask about their professional indemnity insurance – including how much it covers – and find out exactly how much you’ll be paying them for their advice.

The insider's take

Our resident Life Insurance Expert and Financial Advisor Lisa Varker says that things have changed a lot since FASEA was set up including:

Some advice fees for life insurance are now waived by financial advisers in lieu of commissions paid directly from the companies.
Financial advisers can no longer hide fees and commissions – everything has to be disclosed.
At the same time many fees have now been reduced or banned by FASEA as well.
Fees will vary for advisors, and they can charge hourly. I know some insurance advisers who charge an initial consult fee of $250 to cover expenses too.