A more than 40 percent drop in the number of financial advisers in Australia in just over five years is threatening to impact the lifestyles of retirees.
CPA Australia Superannuation Lead Richard Webb said a mass exodus of financial advisers risked exposing millions of Australians on the cusp of retirement to making high-risk investment decisions.
Mr Webb said the number listed on the Financial Adviser Register had almost halved in six years, down from 26,500 in 2019 to 15,300 as of July this year.
“Unless urgent action is taken to reverse the increasing shortage of advisers, too many Australians will start their retirements without receiving the professional advice they need to ensure they have secure and reliable retirement incomes.”
Mr Webb said recent research found an increasing number of Australians nearing their retirement planned to reinvest their superannuation savings outside the super sector.
He said this included pouring their money into speculative and potentially volatile investment options such as cryptocurrency, gold and property.
“More than 2.5 million Australians will retire in the next decade – and many will be shocked to discover there are fewer than 15,300 professional financial advisers to assist them with some of the biggest decisions of their lives.
“With the increasing propensity of retirees to leave their super funds and seek higher investment returns through risky investments, expert financial advice is needed now more than ever.”
Mr Webb said CPA Australia was calling on the Federal Government to prioritise a review of the regulations and costs forcing advisers out of the profession, as well as deterring new entrants.
He said this included finalising:
- The post-implementation review of the Compensation Scheme of Last Resort.
- Updated financial advice education standards.
- Changes to the financial advice best interest duty.
- Clarifying the role of the new class of adviser.
“Investing retirement savings is complex, and carries with it intricate tax and super settings, asset tests and administrative burdens,” Mr Webb said.
“However, getting the right advice is only becoming harder to find and more expensive.
“The federal government must take action to help alleviate the burden of regulation and costs faced by advisers before the shortage becomes an irreversible crisis.”
He said the tightening of regulations following the Hayne Royal Commission was intended to improve outcomes for clients, but the sharp decline in the advice sector has proved an unfortunate consequence.
“The cumulative effect of the regulatory burden imposed on the profession in recent years has demoralised advisers to the point where many are now walking away from businesses they grew from the ground up,” Mr Webb said.
