Banks have barely maintained authorised financial adviser (AFA) stocks over the last three years, a new Investment News NZ (IN NZ) analysis has found.
The bespoke research, which follows on from the ground-breaking 2013 ‘AFA today’ study, shows collective bank AFA numbers grew by just six over the three-year period.
Excluding the 32 JB Were AFAs, labelled as a separate entity in the earlier report but now classified as part of BNZ (after parent National Australia Bank took over full ownership this year) in the 2016 study, bank AFA numbers would have actually declined since 2013.
Proportionally, bank-owned AFAs held steady at just under 20 per cent (or 18 per cent excluding the JB Were group) of the total AFA population – albeit a group that has shrunk from 1,895 in 2013 to just 1,861 at the latest count.
While the banks stayed in neutral, however, stockbroking houses saw solid adviser growth with AFA numbers increasing from 381 in 2013 to 405 this year. Stockbrokers – including the JB Were cohort and a handful of former Direct Broker (now ANZ) advisers – account for almost 22 per cent of all AFAs compared to 20 per cent in 2013.
Over the same period, the other distribution behemoth, AMP, saw absolute AFA numbers fall by 13 to hit 201 this year with its market share dropping a marginal -0.2 per cent.
However, the apparent static AFA market suggested by the top-line numbers masks a flurry of underlying activity.
According to the IN NZ research, 311 AFAs have handed in their tags since 2013 as 277 new advisers gained the formal classification. Over the same period, almost 280 AFAs have changed employer – either shifting between entities or launching into self-employment.
In spite of the overall decline in AMP-affiliated AFA numbers the Australasian financial services stalwart attracted the most adviser defections with about 40 joining its ranks from competitors over the three-year period. The AMP figure was helped by its purchase of the previously-independent Goldridge adviser group during the study period, which added about 15 to the AFA headcount.
Outside of AMP, the two largest broking houses, Craigs Investment Partners and Forsyth Barr, inspired the highest number of AFA career changes, with 12 and 16 advisers respectively swapping employers to join their ranks.
BNZ and ANZ also managed to pick off more than 10 AFAs apiece from competitors over the three years.
Of AFAs newly-registered since 2013, ANZ signed on the highest number (31) with AMP, BNZ, ASB and Craigs also making a decent fist of hiring fresh recruits during the period.
Most of the above groups also featured in the career-ending statistics with about 40 previous AMP-affiliated advisers no longer registered as AFAs in 2016. Westpac also lost about 30 AFAs off its books since 2013, almost three-times the amount of each of the bank’s three Australian-owned rivals.
But the biggest exodus occurred in trustee firm Guardian Trust (bought by Perpetual Trust during the inter-study period) which shed about 45 AFAs since 2013 to register just 15 in the latest list.
The IN NZ analysis shows that while absolute numbers of investment-oriented and insurance-inclined (as defined in the 2013 report) have fallen over the last three years, proportionally the two groups have remained steady. At the same time, stockbrokers and the ‘other’ category have increased slightly as measured by nominal figures and market share over the period.
The ‘other’ category encompasses a motley crew of AFAs including funds management staff, regulators, mortgage and property specialists, mysterious ‘wholesale’ types, and – in what IN NZ understands may be a surprise to them – licensed independent trustees.
With the AFA designation possibly destined for oblivion under the in-train Financial Advisers Act (FAA) review, the IN NZ study adds detail to anecdotal evidence suggesting the sector is in decline, or at best, on hold.
In a speech to the Trans-Tasman Business Circle late last month, Financial Markets Authority (FMA) chief, Rob Everett, said the regulator “strongly” supports the FAA review proposal “to level the playing field across advice by ensuring that anyone delivering it be subject to the requirement that they do not put their interests before those of the customer”.
Everett said: “In the context of advice and its accessibility, I believe that what we should be aiming for is the existence of robust, well-regulated and trustworthy offerings that include:
- independent non-aligned advisers
- well-trained and thoughtfully incentivised sales forces in banks etc.
- robo or digital advice channels – which may often be constructed and managed offshore, and which will become a major influence for the generations below 40-45.”
The IN NZ analysis is based on the FMA list of AFAs published in 2013 and in February of this year, as well as information on the Financial Services Provider Register and provider websites.
For further information on the IN NZ study please contact david@investmentnews.co.nz