Financial adviser numbers are in the red | Optimo Pathfinder

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Financial adviser numbers are in the red: what this means for the future of your industry

The number of financial advisers in Australia has been steadily declining in recent years. If you are currently planning to leave, or reconsidering studying to become one, don’t give up hope just yet. 

Read on to discover ways to not just survive but thrive in the current financial modelling climate. 

Why are financial advisers leaving the industry?

There are several reasons why financial advisers are leaving the industry, and why new graduates are choosing to avoid it. 

Stricter qualifications and regulations

In March 2017 there was a review of standards in the industry and the rules for education and training were changed. As a result, from January 1st, 2019, several additional qualifications were mandated for prospective and existing financial advisers.

The new qualification standards expected of financial advisers are:

For current financial advisers who don’t have a bachelor’s degree equivalent, or haven’t passed a financial adviser exam, equivalent qualifications have to be achieved by January 1 2026, and the exam had to be passed by January 1 2022. 

Many existing advisers have retired or left the industry, rather than attaining the expected qualifications. Meanwhile, students have become discouraged from wanting to take their place. 

What are the consequences of everyone leaving?

It’s tempting to reflect inward when experiencing a time of change, however, the effects of these obstacles are also impacting your clients and your competitors. 

Fewer options for consumers

For any service industry, if the clients are unhappy, everyone suffers. 

This may seem obvious, but fewer financial advisers in the industry means there are fewer financial advisers for clients to choose from. That’s a big problem. 

You might be thinking less competition means there are more clients for you. In some cases that might be true. In others, it gives you fewer opportunities to specialise and find the types of clients you like to work with.  

If clients have fewer advisers to choose from, it’s harder for them to shop around to find an adviser that’s a good match for their needs, so they may give up their search too soon and decide not to get any advice at all. You want to be attracting clients because they believe in your service, not because you were their only option.

Higher fees

Another impact on clients is the increase in fees. With stricter education standards and the growing burden of compliance, the workload of providing advice is increasing and margins are shrinking. Plus, with less competition, it can be tempting for advisers to increase their fees, safe in the knowledge that they won’t be undercut by their competitors.

So, it’s no surprise that in 2021, the median annual client fee rose by 16 per cent, to $3,256. However, there is a limit to how much clients are prepared to pay for advice. During the same period, the percentage of Australians who saw value in financial advice was a little over 60%. Meanwhile, only approximately 5% were willing to pay fees over $2,500. AdviserRating has written an article discussing these statistics.

What can you conclude from these figures? Clients are checking prices and deciding that financial advice isn’t worth it.

More work and less time to do it

With the adviser-to-client ratio becoming more imbalanced every year, there is an ever-widening gap between the quality clients expect, and the quality financial advisers can feasibly deliver given what clients are prepared to pay. Compounded with the higher fees and difficulty finding advisers, the industry’s reputation is under threat. 

With these factors adding up, many financial advisers are struggling to stay profitable.

What’s the solution?

This is a pretty grim prediction for the future. The good news is, with one simple change in your business, your prospects can look brighter.

Advisers embracing modelling software

Financial advisers aren’t falling out of love with modelling and helping their clients. They are falling out of love with all the admin and red tape that’s stealing their focus. 

With financial modelling software, such as Optimo Pathfinder, advisers get the best of both worlds: accurate, flexible financial modelling and time saved on admin.  

Modelling is easier, more flexible and more accurate

Financial modelling software is revolutionising the service that advisers can provide for their clients. Just a few of the modelling features are:

  • Quickly create a basic cash flow scenario as a baseline to understand your client’s initial cash flow position and check the information they provided
  • Easily explore and compare the projected outcomes of different goals and investment classes
  • Create strategies that are not only feasible, but take best advantage of government benefits and legislation
  • Demonstrate the value of your advice by comparing it against the baseline
  • Easily adjust and recalculate strategies if clients request changes or need a review

By using modelling software, you can save time on calculations and data entry, and focus on your clients and their goals instead. Clients will be impressed by the detail and speed of your proposals, and you will feel much more confident in the quality of the results.

Less time on admin

When you became a financial adviser, did you have a passion for helping clients reach their goals that has been stifled by your administrative workload? Modelling software is an excellent tool for helping you cut through the red tape. It saves time by:

  • Creating strategies that adhere to legislation and other tax rules
  • Keeping up to date with changes to legislation, so you don’t have to
  • Automatically generating charts and plain English summaries that are easy for your clients to understand
  • Producing detailed reports to back up the calculations
  • Having out-of-the box templates so you can include a range of detail in client documents

By not spending as much time on legislation research and document preparation, you can free your time to focus on what matters most – giving financial advice.

What financial modelling software means for your business

So, what do more accurate results and faster turnaround times mean for you? More satisfaction for your clients, and more job satisfaction for yourself. From a more tangible point of view, it will also give you the edge over your competitors. 

Comfortably handle more customers

Now that you are spending less time on admin, research and data entry, you can afford to take on more clients while maintaining the quality of advice you want to provide. Also, because you can easily demonstrate the value of your advice with engaging documents, clients will be more confident and happier with your advice, which could lead to more referrals. 

Lower fees

Time is money. When it takes less time to produce great strategies, you can provide high quality advice at a price your clients are willing to pay while still being sustainable for your business. Your competitors who are refusing to use modelling software won’t keep up. Once clients realise that your results are affordable, higher quality and faster, you will thrive while others struggle to survive. 

Social proof and recognised expertise

Financial modelling software is not going anywhere. Its increasing involvement in financial advising is inevitable. Advisers who have taken advantage of it early will have a head start on their competitors who are reluctant to embrace change.

In the future, you will distinguish yourself as an expert on modelling technology. Be a trend-setter in your field.  

Future of financial advising 

There is a lot to be optimistic about in the future of the financial advice industry. Despite so many changes and challenges, what hasn’t changed is that people need help navigating the rules and complexity of their personal finances and need guidance on how to reach their goals.  

Advisers who can remove the obstacles and objections to finding and paying for financial advice, will stand out from the pack. To do this, they need to provide high-quality, good-value advice that their clients are happy and confident to follow.

The unprecedented disruption of COVID-19 has been a stark reality check. In a matter of months, people’s financial futures became uncertain, and their plans needed to change in complex and reactive ways. 

The need for financial advice is so pronounced that temporary relief measures have been introduced in the finance sector to lower fees and encourage consultations. 

The current home buyers market is also extremely restrictive. There is an entire generation of young people wondering how it is possible to save for a house – and if it isn’t, how to invest their money instead. 

Don’t get left behind!

Turn the challenges facing financial advisers to your advantage by signing up for a free trial of Optimo Pathfinder software. With its flexible, accurate and time saving qualities, don’t wait to make financial advising worth it again. 



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