The AFSL with the most loyal advisers is…

Welcome to the second report pertaining to our analysis of the Australian Financial Advisers1. The previous post studied the overall Australian market and in this post we look deeper at the analysis related to AFSL’s with a continued focus on Adviser loyalty. Whilst we analysed the entire ASIC dataset2, we have restricted the outputs in this report to the key players in the market. Of particular interest to us was the differences and/or inter-relationships, if any, between Non-Aligned and Aligned advisers.

Before we look at the loyalty factor and the company with the most loyal advisers (the answer is Macquarie – but that’s not the most insightful part of this report), let’s first look at the growth of the Advisers at the top 8 Licensees and the Non-Aligned group. We use “Active Advisers” as the key metric for growth since it represents the distribution strength / reach of the entity.

We noted in the previous post that the overall industry has grown at a healthy rate of 13.4% (Active Advisers, for the study period of 2005 – 2015). The chart below illustrates the growth at the major players during this study period.

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Licence Controller CAGR (2005 – 2015)
Westpac Banking Corporation 16.4%
Australia & New Zealand Banking Group Limited 14.2%
Non-Aligned 13.8%
National Australia Bank Limited 12.0%
IOOF Holdings Limited 11.7%
Suncorp Group Limited 11.2%
AMP 11.0%
Commonwealth Bank of Australia 9.8%
Macquarie Group Limited 6.0%

As the chart depicts, the Non-Aligned Advisers have had a strong run with a substantial uptick in 2015, but the fastest growing licensee has been Westpac with a growth rate of 16.4%, followed by ANZ at 14.2%. It is interesting to note that Macquarie has had a steady growth at 6% – almost half the industry average. We would like to acknowledge that this analysis masks significant industry events such as acquisitions (ex: ANZ’s purchase of ING) and divestures/exits (ex: Suncorp exiting the Financial Planning space).

In addition to Active Advisers, we also analysed the data pertaining to the recruitment of new advisers and cessation of advisers. These metrics reflect the ability to attract and retain talent. Our outputs indicated an increased switching in the recent past, particularly since 2015.

Most Likely Next Destination

Given that switching is inherent to the nature of the business and is in fact increasing, we wondered if there were any insights related to the “most likely next destination” when an adviser switches.

We could indeed deduce strong patterns where advisers have tended to move during the study period. Outlined below is a “hub-n-spoke” diagram that represents the % of Advisers who have chosen to move from being Aligned to Non-Aligned. The diagram shows that of all the advisers who became Non-Aligned in the study period, 10.25% were from AMP followed by NAB at 6%, etc.


We then analysed movements from Non-Aligned to Aligned, i.e., answering the question “Who would a Non-Aligned Adviser most likely join?”. This is critical in that it encapsulates brand power as well as reflects the marketing / BD prowess of the entities.

Finally, we built deeper models to derive the hub-n-spoke diagram for any given organisation – both inbound and outbound. (Please register at the end of this post, should you be interested in the overall industry dynamics or deeper analysis for your firm).

The Loyalty Awards

OK, so now for the important bit – the loyalty awards. In an industry that witnesses a fair bit of movement, who commands the highest degree of loyalty from their Advisers? We broke down this analysis into two questions to reflect not only the historical movements but also the current state of affairs:

1. What percentage of Advisers had never left the licensee during the study period?
2. What is the average tenure for the current Advisers within each licensee?

The chart below represents the ratio of Advisers who have never switched, to the number of Advisers who actively served the brand during the study period.

Click to enlarge

The award clearly goes to Macquarie who had 57% of their Advisers remain loyal to the licensee. This reinforces their brand image of being a solid boutique business delivering strong value to the advisers and growing at a steady pace.

However, it was interesting to see CBA emerge as a close second and well ahead of their peers, retaining ~55% of the Advisers. The abysmally low number for Suncorp perhaps reflects the bleeding once they decided to exit the Advice business.

Finally, we looked at the average tenure of the advisers who are on the books of these firms today. Macquarie leads the way with an average tenure of 8.3 years followed by CBA at 6.13 years. We would like to also call out the strong performance of AMP, who, despite a large Adviser base, have an average tenure of 5.5 years.

Click to enlarge


Our analysis generated a range of interesting insights based on the available data. However, if we were to announce industry awards pertaining to the study period, our top three picks would be:

  • Firm with the fastest growing Advisers – Westpac
  • Firm with the most loyal Advisers – Macquarie
  • Firm with the highest degree of resilience – CBA

In the next post we will focus on the industry movements since Jan 2016 and study the composition of Advisers by product categories.


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Notes / Source

1. The definition of an Adviser is much broader than the typical interpretation of a Financial Planner and includes a wide range of Advisory segments (such as Deposits, Margin Lending, Derivatives, Investments, etc.,)


Sandeep Rao – Sandeep is the founder and CEO of Einsights.
Pranay Roy – Pranay is a Data Scientist at Einsights.

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