Adviser Churn Continues but New Entrants Fill the Gaps

Following reports that just 1,200 specialist risk advisers are working in Australia – down by more than 600 on a year ago – we asked New Zealand’s dealer groups if a similar trend was emerging here.

Across The Ditch, Adviser Ratings says hundreds of risk advisers left the sector last year – a rate of more than twice that of their non-risk counterparts.

“To further complicate the exits, some holistic advisers are choosing to remove risk advice altogether due to the cost, complexity, and compliance,” says the firm. “Leaving some clients orphaned.”

Could something similar happen here?

In New Zealand, Partners Life has seen advisers leave the industry, but not at the same rate as reported in Australia.

“We have seen a number of advisers exiting the industry over the past couple of years, but we have not seen the same wholesale market disruption that Australia has experienced,” says Tony Arthur, Partners Life’s Chief Commercial Officer.

“In our conversations with advisers, we are also aware that there will be more who will either leave or join and operate under other FAP businesses as the transitional licensing and level 5 qualification grandfathering period finishes.

“It is important to understand though that the New Zealand market has not seen the level of regulatory change as has occurred in Australia e.g. licence, education or commission related.”

Arthur says there is no doubt the introduction of new regulations has been the catalyst for many advisers looking to exit.

“However, it is important to note that during the same period, we have also seen significant numbers of new advisers enter the industry – many of whom we have hosted through our New Adviser Training programme.”

…we’re seeing plenty of talented new advisers joining the industry…

David Haak, Cigna New Zealand General Manager – Distribution, says it is too early to tell if the local market will follow Australia.

“While there’s a natural progression of advisers leaving the industry – who were already planning on retiring – when my team and I are out and about across the country we’re seeing plenty of talented new advisers joining the industry,” he says.

In addition, Haak says there are plenty of advisers who have been around for a while that have built robust businesses and “…are going nowhere”.

Graham Hill, Executive Manager Distribution at Asteron Life, has also seen first-hand that a number of advisers have exited the industry over the past couple of years, “…with the numbers increasing as we move closer to full licensing”.

“But the kind of figures reported in Australia of customers being left ‘orphaned’ with no adviser is not something we’re seeing here in New Zealand,” he says.

“Client portfolios from exiting advisers have mainly changed hands to advisory businesses who have embraced the regulatory change, and have the capacity to take on more customers,” says Hill.

“While the increased compliance and educational costs of the new licensing regime might have accelerated some advisers’ retirement plans, the new requirements will support greater professionalism of the industry and ultimately lead to better customer outcomes.”

Hill says Asteron Life is working supporting advisers with their transition to the new licensing regime and, in some cases, helping advisers to find buyers for their portfolios.

See our story: Specialist Risk Adviser Numbers Drop in Australia

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