Professional Services · Industry Report

Adviser Shortage Creates Pricing Power in Recovering Market — but Regulatory Load Crushes Small Practices

Growing demand from ageing population and SMSF boom meets collapsing adviser supply, transforming practice economics and driving consolidation across the dealer group landscape.

01 — Market Overview

Key Points

• AFSL licensing complexity is a strategic moat— the post-Royal Commission regulatory framework (section 912B requirements, FASEA education mandates, PI insurance minimums of AUD$16,000–$50,000 p.a.) creates barriers to entry that protect existing practices from new competitors but crush small players
• FUA (Funds Under Advice) is the master metric— valuations, pricing power, and operational leverage all flow from FUA quality and retention; average practice manages AUD$225 million in FUA across approximately 200–300 client relationships
• Adviser shortage is structural, not cyclical— adviser numbers plunged from 26,000+ in 2019 to 15,469 by November 2025, creating acute supply constraints that are bidding up practice prices and enabling fee increases

Market Size & Growth

The Australian financial planning and investment advice industry generated AUD$6.1 billion in revenue during 2025, representing a decline at a compound annual growth rate of -1.8% over the preceding five years (IBISWorld, 2025). This contraction reflects the devastating impact of post-Royal Commission regulatory tightening (2018–2021) which forced tens of thousands of advisers out of the profession before recent recovery dynamics have begun reversing the trend.

Industry Sub-Segments

What's Driving Growth Right Now

Ageing population and SMSF boom— Australia's population is ageing rapidly with SMSF numbers reaching 653,062 funds holding AUD$1.05 trillion in assets as at June 2025, representing nearly 24% of all superannuation assets (ATO, 2025). New SMSF establishments hit 14,494 in the September 2025 quarter alone, the highest on record, with 34% of currently unadvised SMSFs expressing intent to seek financial advice — a jump from 25% in 2024 (ATO, 2025). This structural demand tailwind translates into fee growth and FUA expansion for practices specialising in SMSF advice and coordinated wealth planning.

Adviser shortage is driving pricing power— the collapse from 26,000 licensed advisers in 2019 to 15,469 by November 2025 has created acute supply-demand imbalance; practices can now command premium fees (particularly in recurring revenue models), while licensees are aggressively acquiring books at elevated multiples (IBISWorld, 2025). This shortage is expected to persist for 3–5 years as education mandates (FASEA degree or equivalent, mandatory from January 2026) and licensing complexity continue deterring new entrants.

Post-Royal Commission trust recovery— consumer trust in financial advice has measurably recovered since the 2018 Royal Commission nadir; regulatory reforms are now viewed as competency filters rather than obstacles, and the surviving profession benefits from consolidation and quality improvement (Money Management, 2024). Fee increases have been absorbed without client attrition in most quality practices.

Superannuation balance growth and transition to decumulation— Australian superannuation balances hit approximately AUD$4.33 trillion in 2025, with the 55+ demographic now entering drawdown phases; this transition drives demand for income planning, tax-optimisation, estate planning, and ongoing portfolio rebalancing services (IBISWorld, 2025).

Consolidation creating dealer group licensing scale— the rise of platforms like AZ NGA (130 acquisitions since 2015, targeting quadrupling in size over 3–5 years) and Sequoia (pursuing 500 advisers within InterPrac and Sequoia Wealth Management by 2026) has created licensing efficiencies; smaller independent practices are increasingly opting into dealer group structures to reduce compliance burden and access better technology and systems (Money Management, 2024–2025).