We call it the “advice diaspora”. It’s the observed phenomenon of financial advisers driven from institutionally owned licensees by market, regulatory and other forces, and finding homes with smaller licensees. It’s been underway for some time, its effect on the advice industry has been profound, and its implications will be long lasting.

Institutionally owned licensees offered advisers some clear benefits and offered benefits to the clients of advisers as well.

Advisers enjoyed the benefits of the licensee’s scale, and the benefits of being part of a large community of peers and colleagues. Clients enjoyed benefits as well, including access to advice at an affordable cost. Some of the other benefits for clients were brought into sharp focus once ASIC and the Hayne Royal commission had done their respective things: the deep pockets of the institutions funded mammoth compensation for consumers who’d received no advice or had received poor advice.

The issue of how that happened in the first place is another issue, of course, but an upshot is that institutionally owned licensees were closed down, forcing some advisers to seek another home, while other advisers chose to shift from under an institutional umbrella in response to what they saw as draconian or overly prescriptive compliance processes. Other advisers left for other reasons – including choosing not to come up to speed with education, professional and ethical standards – but the combined impact of these decisions has been clear.

When we measure it by the number of advisers on licenses we find that what we define as the large tier of the licensee market is now essentially equivalent in adviser numbers to the top tier of the industry. And what we define as the medium tier is also broadly the same as the top tier. There are approximately 5600 advisers in the top tier, and about 5400 advisers in each of the large and medium tiers.

This means that a significantly greater proportion of advisers are now authorised by licensees that don’t have the scale and the resources of the top tier of licensees. That has implications on a number of levels. There’s the consumer compensation issue, as mentioned previously. But there’s also the question of whether the smaller licensee cohort is as well resourced as the top tier of the market to support advisers in running their businesses and delivering advice.

We’re not casting aspersions on the large and medium tiers of the licensee market – far from it. But we are extremely interested to understand better how advisers in those tiers experience the performance of their licensee, its resourcing, strength of leadership and its ability to help advisers make their businesses more efficient and profitable and deliver high-quality, compliant advice to clients.

Naturally, the best way to assess advisers’ experiences with licensees is to directly ask the advisers. That’s what we’re doing with our 2021 Licensee Research, which opened this week. We’re inviting all New Model Adviser readers to take part in this landmark annual research project.

Last year more than 660 financial advisers across the country contributed. It involves an online survey taking up to 20 minutes to complete, depending on how some of the questions are answered. We fully recognise that 20 minutes is a serious commitment of time, and the detail of the analysis that’s possible from the licensee research is a strong testament to the willingness of advisers to support the research over the years.

The results have in the past been instrumental in helping licensees to understand how they can support advisers better, and to develop more attractive value propositions. And advisers have been the beneficiaries.

This year we’ll be examining closely the relative strengths of top-tier, large, medium and small licensees, as assessed by advisers, to better understand how the financial advice industry as a whole is being supported by the licensee industry.

PLEASE NOTE: The 2021 CoreData Licensee research is not designed for own-AFSL or self-licensed advice firms. A separate piece of research covering own-AFSL firms is being prepared.