The Australian financial advice landscape is undergoing a seismic shift, with a mass exodus of professionals reshaping the industry. According to columnist Nick Bruining, the number of practising financial advisers has plummeted from a peak of around 28,000 to just over 15,600 today—a staggering loss of more than 10,000 advisers.
The Driving Forces Behind the Adviser Exodus
This dramatic reduction, often termed 'the great purge', stems from a perfect storm of regulatory changes and increased compliance burdens. The catalyst was the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which concluded in 2019. Its findings led to sweeping reforms designed to protect consumers but have also made operating as an adviser significantly more complex and costly.
Key changes include the introduction of a mandatory Financial Advisers Exam and stringent educational requirements, forcing many long-standing practitioners to either return to study or exit the profession. Furthermore, the removal of controversial grandfathering provisions on conflicted remuneration eliminated a stream of ongoing commission income, making many business models unviable.
Don't Assume All the 'Bad Apples' Are Gone
While the intent of these reforms is to lift professional standards and weed out unethical operators, Nick Bruining offers a crucial warning: consumers should not kid themselves that all the 'bad apples' have automatically been removed. The exit has been largely driven by compliance and cost, not a moral filtering process.
'The people leaving are not necessarily the ones you would want to leave,' Bruining notes. Many experienced, ethical advisers who provided valuable service to middle Australia have chosen retirement or a career change over navigating the new, arduous requirements. Conversely, some less scrupulous operators may have the resources and determination to meet the new benchmarks and remain in the industry.
The real measure of an adviser's quality, Bruining suggests, remains their ethical framework and commitment to acting in their client's best interests—a principle that no exam alone can guarantee.
The Consequences for Everyday Australians
The fallout from this adviser shortage is already being felt by consumers. The most immediate impact is a sharp reduction in access to affordable advice. With fewer advisers available, those remaining are increasingly focusing on high-net-worth clients, leaving a significant advice gap for average Australians with simpler needs.
This creates a dangerous paradox where the reforms designed to protect people may end up pushing them towards unregulated sources of financial information or forcing them to make complex decisions completely alone. The cost of advice is also rising, as practices pass on the expenses of increased compliance, professional indemnity insurance, and education to their clients.
For those seeking a new adviser, Bruining emphasises the importance of thorough due diligence. Key steps include:
- Checking their credentials and registration on the Financial Advisers Register on the Moneysmart website.
- Carefully reviewing the Fee Disclosure Statement and Financial Services Guide to understand what you are paying for.
- Ensuring any advice provided is documented in a clear, written Statement of Advice.
- Asking direct questions about how the adviser is remunerated and any potential conflicts of interest.
The transformation of Australia's financial advice sector is profound and ongoing. While the goal of a more professional, trustworthy industry is laudable, the transition is proving painful and imperfect. As Nick Bruining concludes, the responsibility now falls more heavily on consumers to be vigilant, informed, and proactive in seeking out the quality advice they need and deserve.
