Why we are losing more financial advisers than ever in historyBY GREG OWEN | FRIDAY, 29 OCT 2021 1:28PMI have been in the financial services industry for 40 years, having been the past NSW President of the Australian Lifewriters Association (ALA) which is now the Association of ... Upgrade your subscription to access this article
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LIAM ROCHE
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Great article Greg ......many advisers have been thinking this same thing while the industry burns via Government over reach.
Very accurate article, from loss of Adviser remuneration to Education over kill. Incomes have reduced but costs have accelerated. Every forced Government change has spawned new industries, like parraplanning, search engines, comparritors, research, education and training plus compliance and Dealer Groups. Not to mention fees for Tax Boards, Fasea, Regulators and now a Disciplinary Board. All funded by Advisers on a decreasing income base. Thats all before businesses expenses to run a practice. We like the Professional tag but honestly what Profession sells a Product. We can not get a fee for service unless we are servicing a Product, which is sold. Education standards to be met, are over the top for 50 plus Advisers with 20 plus years experience. The feed back from clients tells us this education is beyond their understanding too. Small businesses have been devastated, lives, careers and retirements are in a mess. Maybe the Government has no idea what they have done as underinsurance is on the rise, the public are being neglected. A superannuation survey I heard about said only 34% of people new their balance. It is about that percentage that have an Adviser. Another fact to prove Government is not sure of its actions is the loss of Tax revenue. With 15,000 few advisers now that would equate to loss of All Tax revenue of about $3 billion per year. A good practice would generate that much through GST, Company and personal income Tax. Not to mention the loss of over 30,000 jobs or even much more. The Government's one sided handling of The Financial Services Industry is amateurish in its outcome.
This is the best summary I have read
Well done mate
Well said Greg and hit the nail on the head on every point!
Simpy nailed it.
I'm 40 years plus in this so called industry, Not one of the regulators have crossed the bridge, and have seen the benefit of what we actually do for a living. I'm at approximately 3.5 million in Trauma claims over the past four years, As our clients age, they will need us more and more, pity I cant afford to stay in the industry and look after my aging clients.
Great article Greg
I have been an adviser for over 20 years myself and have completed the FASEA exam..
But sadly I feel I can no longer continue in this now increasingly dysfunctional industry that regulators have now constructed to the detriment of clients, hard working advisors and their staff.
Its hard to understand if the regulators truly have an understanding of the consequences of their actions..
This is exactly what I have been saying for years! Despite over 30 years experience in the financial planning industry and 41 years in tax and accounting, I am forced by a dodgy system to sit a FASEA exam to be able co continue doing my job! Absolutely no credit for the years of experience I have and the numerous clients I have helped along the way.
Why do I have to do this exam which is no doubt designed to get competition away from the big boys? Furthermore, when you look at the board of organisations such as ASIC, FASEA and the accounting bodies, they are made up of mainly academics who have never worked in a public practice, or partners/directors of large accounting firms or financial institutions.
I doubt that many of these woke, politically correct people have ever sat in front of a client to realise that the majority aren't worried about the trendy "ethical investments" or companies moving towards a carbon-neutral footprint. Clients want investments that will achieve their financial goals and the above type of products are the last thing on most people's minds.
To be honest, I too have considered giving financial planning away. It has gone in the wrong direction and the regulations are way over the top.
Apart from some understandably emotive expression of the concern he has for the industry, this article by Greg Owen very well encapsulates the frustration of many experienced advisers: the Hayne Royal Commission was poorly conceived, the TORs were misdirected - and the process ignored the actions of the numerous small businesses that have provided excellent, trusted, beneficial wealth management services to numerous Australian families.
The vertically integrated financial services model was appropriately exposed as deleterious to the financial wellbeing of ordinary Australians in the greedy search for shareholder profits, by the major institutions.
Perhaps the pendulum of excruciating regulation will swing, but it will be too late to retain the broad-based skills and experience of a significant number of very competent, financial planners (also acting as wealth counsellors).
A solid arguement about the issues facing the individual advisor. Its interesting to note that no other profession in Australia has any body regulating and enforcing fees or charges. Who knows what might turn up with a review? even Doctors while facing regulated charges have an 'opt out' capability.
However i believe most commentators have missed the key economic issue for Australia. This is the issue of underinsurance. In a socialist leaning country like Australia the burden of lack of widespread insurance will always fall on the community (as it has in the case of the National Disability scheme). So in the light of the changes wrought by Haynes we will certainly get a shift of the underinsurance burden from the family/insurance company to the community. More public pensions, more poverty visited on children and more long term destructions of lives that with another strategy (encouraging and pushing wide spread life/insurance cover among the population - similar to super) could have been totally avoided. Public policy at its worst!!
Well said Greg, I couldn't agree more. My thoughts are that the benefits of risk insurance have not been appreciated by those on big incomes who can most likely survive financially without it when something goes wrong. As an adviser since 1990, I have dealt with many claims and my clients have received amazing benefits which otherwise would have left them devastated financially and emotionally. It is now no longer viable for me to take on new clients looking for risk advice without requesting an upfront SOA fee which I find is a difficult thing to ask for, especially when there is no guarantee they will get the cover. It is clear that those who have created this mess didn't really understand our business.
I'm sorry to see you go Greg, so much knowledge and positive advocacy for the industry is lost each time one of the long term 'riskies' hangs up their boots and says enough is enough.
My advice business is more or less in its infancy by comparison to you but already I feel restricted in our ability to grow given the all of the things you have mentioned above, greatly reduced income, increased responsibility and compliance costs, PI insurance increases, Asic levy's, higher education requirements for new entrants and now watered down policies.
I can honestly say that if I was a young graduate I would have a hard to being convinced to join. While the benefit to the client remains the upside is no longer enticing enough for the adviser.
9000 ceased advisers in less than three years and only 163 new entrants this year to date. This speaks volumes.
Well articulated Greg, the sentiments of thousands of frustrated and angry financial advisers who have cared for their clients, did plenty of pro bono work, and handed over $ Millions insurance claim cheques to beneficiaries. We promised to be there for our clients and we were.
There has been a long term vision of the regulators and Governments to cull the financial services industry, and cull they did with the introduction of FASEA and the need to complete another degree by 2026. We will see more advisers leave as of 31/12/2021, and a final cull by 2026. FASEA was so good that it has now been abolished by the Feds, but it has had it's desired effect and that was to cull the industry. We saw many advisers leave the industry after FSR in 2004. So one can see the pattern, Trowbridge, LIF and the Hayne RC just nailed a few more nails into the financial services coffin.
The sad thing which has been so eloquently articulated above by remaining advisers is the "Brain Drain" of experienced quality caring financial advisers, who have been mentoring younger advisers all their lives. Where will the future mentoring and counselling of new advisers come from? The life companies do not provide this anymore, the AFA can only provide limited opportunities through their seminars, and now we see the experienced advisers leaving because they have been smashed with over regulation and inflated costs for PI cover, ASIC Levy etc.
The overall result will be the huge underinsurance for people who need insurances the most, because they will not be able to afford the services of a financial adviser, as advisers look to the higher net worth clients to run profitable businesses. This could have all been so easily avoided if the Governments talked to advisers and "walked in our shoes" so they could get a real FEEL for our industry, and what we do on a daily basis in serving our clients. As Gray Goodwin above articulates so well "Public policy at its worst!"
Great Article Greg, your points on who actually build the products that we sell, the grey brain drain, the FSC members who got off scot free, the underinsurance problem, the pressure that will be felt by tax payers (Centerlink & Medicare) in the future, the average Australian will not be able to afford future advice , the exodus of over 15,000 advisers.........and SCOMO still will not listen.
Great article Greg and I agree with your sentiments. It's sad that much of the change in our industry has made it harder and more expensive for individuals to seek advice and more costly to run advice businesses.
Well said Greg, and good luck in your future endeavours. In my mind the FSC have deliberately driven change to benefit there members which are made up the majority of banks and insurance company's. They have done this via the Trowbridge report and the Hayne royal commission. They have given no concern for the average Australian who can no longer afford our advice due to advisers increased compliance costs. I have never seen such distrust of CEOS of life company's and banks due to there behaviour through all of this. Sally loane showed her true colours when she bumbled and stumbled embarrassingly through her opportunity @ the royal commission.
Spot on Greg! After 33 years in the industry I'm struggling to muster the motivation to keep going. I now spend equal time on advising and on compliance. Very sad end to our industry. Only the wealthy will be able to afford advice. The opposite of what regulation should be about.
Well said Greg.
Regulators have thrown the baby out with the bathwater and our industry and its people has paid a heavy price.
It's now impossible for an individual to start/run a business like you did Greg.
Its not the big end of town that has paid the price, as you say the reduction in insurance remuneration hasn't been passed on the client, its disappeared in the ether.
So very sad to see so many great grey advisers like yourself leaving the industry due to regulators giving 'zero' respect to time and tenure.
Brilliant and powerfully said, Greg. Thanks for always shining a spotlight on these deliberate attacks on this industry by the ignorant-powerful.
The FSC has somehow managed to oversee the terminal assault the balance sheets of the entire supply chain; insurer, adviser and consumer. A remarkable outcome.
Thank you for 5 decades of noble service to your community. All the very best for your future endeavours.
Sadly Greg, the people that should be reading this totally accurate article, like Minister Frydenburg and Hume and all the wiz kids at ASIC don't read them. Your article should be taken up by the mainstream media, but it wont be, who gives a damn about us. The Federal Government is more concerned about staying buddies with the banks who have slowly destroyed this industry. It is a disgrace, maybe we should take to the streets!!
Great article Greg - best summary I have read on our sad situation. I've been in the industry just under 20 years and as a pure riskie it is just so hard now. It is a pity the politicians and regulators will not read this and take action.
A good article Greg that hopefully gets some traction where it should. A major institution only this week has launched a significant media campaign encouraging people to seek one on one advice from planners. Why would they do this? Because families have been left bereft of good advice and the majority of Australians are grossly under insured. Congratulations to Macquarie for taking this initiative. Well done too to ASIC and Hayne for completely missing the point. Planners/Advisers require your support and ongoing development of the Financial Advice industry. NOT over the top reactions that appear to be politically motivated. Congratulations to Bill Shorten for stirring up a hornets nest. BTW it didn't help you politically OR haven't you noticed that either?
Individuals, families and SME's require personal financial advice without the bias from the organizations that perpetuate what individual planners have been crucified for. Yes the larger organizations are still pushing their own products and are not acting in the best interests of the clients. I'd love to be able to mentor young advisers coming through the ranks. If only they had a great career path to follow these days without the massive regulatory imposts that have been thrust upon them.
THANK YOU Greg. One could not say everything you've written any more accurately - what a wordsmith. After 36 years as a risk adviser in our once-great industry I too have decided to leave - THIS MONTH, Nov. Why? Well, as with all of your words in your article, I could not say what you said any better, I quote you:-
"But this year, sadly, I decided to leave the industry completely because of the drastic changes that have taken their toll on experienced advisers like myself. If it wasn't for these draconian and over-enthusiastic regulations and reforms, I would have stayed looking after my clients for another 10 years". (Greg Owen)
It has always been my intention to stay as long as my health held out and it was 'fun' to do so. My health is good enough but, as you explained, the 'fun' factor is not there at all anymore - for me it stopped 'about' 5 years ago. I think of the dozen or more advisers I know personally who have also left (or worse!) due to these factors and it saddens and sickens me. Thank you again for putting the feelings of us all into such clear terms here Greg. Very best of luck and joy through your retirement!
Greg is totally correct, the damage being done is going to be felt for decades in the future. Unadvised clients and under-insurance will cost the Government millions every year in lost revenue and support costs. Great advisers are leaving, and external commentators are stating that the clean-out was needed. The industry needed review and revision, not bloodshed and vultures. Good luck Greg, now joining those of us who feel the relief, and regret and sadness of getting out.
Well said in a very professional way.
The government does not have a clue to what they are doing with this industry.
People who have been in the industry or 30-40 years will not generally write exams so they leave the industry and retire, and all the grey hair and experience disappears. Every one I know in the industry will be leaving shortly and then the numbers will plummet even further.
Jane Hume must go and give the job to someone who understands the industry and to someone who responds to correspondence-unlike her.
Greg, you are spot on - I am one of many advisers with plus 20 years of experience now leaving the industry. The so called administrators have in one stroke not only completely destroyed an industry but have denied the normal working man access to vital and affordable planning services.
Great read and so relevant. I hit 37 years in the industry next month. FASEA exam tomorrow (16/11) and just feel its actually hard to concentrate when I think about what is on the line. I pretty much agree with all comments and in my case it is about wanting to stay in advice so as to look after clients that have trusted me with their life savings for 20 odd years who are in their 70's and 80's and want me to stay involved. Not only no complaints but many hundreds of thank you and appreciative emails. I feel it's all too hard these days and I'm getting tired for all the wrong reasons.
A good article that highlights a number of the problems that the inept regulators have created. Hayne's lack of understanding of the real world of financial advice compounded the numerous errors made by ASIC and politicians from both parties.
Having recently done the FASEA exam - yes I passed - I'm more convinced than ever that the regulators are totally out of touch. Minimal relevance to what we do on a daily basis so a missed opportunity to improve the overall quality of the adviser population.
Like many others, I have decided that enough is enough and I am therefore retiring.
Good article Greg. If there was a "playbook" written on how to destroy a profession then certainly this was it. 58 new entrants into the Industry in the last 3 years with Adviser numbers falling from 28,000 to less than 17,000 and still in free fall. For those of us who remain the future is very bright; huge barriers to entry, convoluted legislation that requires advice and rising advice fees. For the Australian battler who cannot afford to pay - there is nothing. A far cry to the Industry I joined 32 years ago where you could help most people and be paid something.
A good account of what has taken place Greg. Its been a typical overkill.
The public servants who are responsible for the legislative changes know nothing about the risk industry & made no attempt to find out before legislating these changes.
It is impossible to run a risk business on 60% commission & satisfy the expectations of clients & the legislated requirements. What is not understood by the legislators is that life insurance is sold, not bought, meaning clients aren't lining up every day to buy life insurance. The cost of client acquisition is significant.
As a witness at the Senator John Williams initiated Senate Inquiry into the industry a few years ago I predicted this would be the outcome & that in less than 20 years the Government, when the social security budget blows out, will be wondering what happened & how to fix it. Sadly it will be too late for a lot of advisers & the community.
My question is more simple than that, as well as everything has been articulated so far.
We know our industry is being strangled by lawyers with clipboard, documentation has become unworkable and the time taken to provide good and comprehensive advice has quadrupled in the last few years. Worst part, nobody apart from the actual advisers seem to care, and we had such a hatchet job done on us by the Royal Commission, there appears no appetite to fix anything.
So , my question. If the basic hardworking Australian with a couple of hundred thousand dollars in super who genuinely wants to get decent advice and improve their overall financial position, can't come to see a qualified and experienced financial planner because of costs . . .
WHERE DO THEY GO ?
Where do we send all these people to get the kind of advice they deserve ? Who looks after them ? Who is going to take the time to listen to what they want, and to not only build something that is not only specific to them, but guide them through the next twenty years as all sorts of things change, and they need someone that they trust, to turn to ? Who is going to stop them being shoehorned into a common box of generic cornflakes with the mantra that "its cheap so it must be good" ? Who is going to talk these people off the ledge of bad financial choices, or stop them falling victim to the latest financial scam doing the rounds of social media. Who is going to hold their hand in the tougher financial times, guide them into and through retirement with dignity and compassion, and make sure that their finances dont run out before they do ?
I thought one of the criticisms of our industry was that we didnt care about the client. Seems that the new rule makers care a hell of a lot less.