Financial adviser numbers increase in spite of high drop-out rate

The number of registered financial advisers active in the South African life insurance industry increased over the past year as life assurers and corporate advisory firms stepped up their recruitment efforts, introducing approximately 3 800 new intermediaries to the industry. However, due to a high drop-out rate of intermediaries, the net gain in terms of adviser numbers was approximately 700, taking the life insurance industry's total to around 17 400.

These were amongst the findings of a recent 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.

"Because of high drop-out levels and the constant entry of new recruits, this is a rejuvenating industry where adviser training should be seen as a continuous priority. Some 32% of advisers have five years or more experience, while just over 49% of intermediaries have two year's or less experience," said Biddie Biddulph, managing director of Astute.

Successful training strategy is important

He added that about 50% of the more established and successful agents tied to life assurers and banks tend to become independent, preferring to operate on their own as independent financial advisers (IFAs) or to join an IFA group.

Biddulph said that the continuous migration of financial advisers emphasised the importance of a successful training strategy, which Astute prioritised during 2011. As the Astute Consolidated Client Portfolio (CCP) platform has become an industry standard, it is included in the training curriculum of most new financial advisers entering the industry. Last year also brought a greater level of professionalism to the role of financial advisers through the Financial Advisory and Intermediary Service (FAIS) Act, and the introduction of regulatory examinations.