Financial Adviser numbers decline as regulation and recession take their toll

But the emergence of younger blood should contribute to renewal in financial services

The number of registered financial advisers active in the South African financial services industry has declined over the past year as intermediaries battle to deal with the challenges of more demanding regulation and the tough socio-economic environment.

The number of financial advisers in the life insurance and investment industry declined some 17% over the past year. Of this, the number of independent financial advisers (IFAs) comprised the majority with an estimated nett reduction in numbers of approximately 1 400 people. The number of advisers employed as agents by life offices and banks also declined, but not to the same extent.

These were amongst the findings of a recent industry survey by Astute, the company that integrates data from financial services product providers for use by advisers when undertaking authorised financial planning for their clients.

The survey found that Astute had made considerable progress in expanding its offering to the professional financial advisory market, which increasingly regarded the company as an essential business partner.

On the decline in adviser numbers, Astute Managing Director, Biddie Biddulph said: “This is an alarming trend, especially since most of those leaving the industry are experienced advisers whose knowledge and skills will be sorely missed. More encouraging, however, has been the emergence of younger blood amongst financial advisers - a trend that should contribute to renewal in the financial services industry.”

Despite the overall fall in adviser numbers, Astute’s user base increased by 1% over the year to around 18 000 intermediaries and administrative staff in South Africa and Namibia.

Biddulph attributed this to the growing use of technology by advisers looking to improve efficiencies and to comply more easily with regulation, as well as recent recruitment drives by life offices. Growth in the range of products for which information is available on the Astute platform has also made a positive difference.

“We’ve significantly expanded our service offering and can now assimilate information online from companies offering life insurance, disability and investment products. Advisers have been quick to exploit the efficiency benefits of our system as a one-stop provider of financial product information,” said Biddulph.

The Astute survey also noted a polarisation in the usage of financial needs analysis (FNA) systems, with Spotlight and Atwork showing strong gains in market share at the expense of other players. These systems are used to analyse the data provided via Astute with a view to conducting proper financial planning for clients.

Said Biddulph: “Most encouraging was that the professional financial adviser community that relies on the quality and soundness of the information and services that we provide, rated Astute highly in terms of its ability to add value to their practices.”