Bigger is Not Always Better: The Changing Face of AFSLs

The Australian financial advice industry is undergoing a structural transformation, and the latest data to June 2025 reveals a striking paradox:

Size is becoming a liability, not an asset, for licensees.

While the total number of ASIC-registered advisers continues to fall, it’s the smaller and mid-sized AFSLs that are defying the trend and adding to their ranks.

Key Trend: Shrinking Titans, Growing Specialists

The market continues to contract, with the total number of ASIC-registered financial advisers decreasing by 2.3% over the 12 previous months to 15,456. However, the pain is not being felt equally across the board.

The data clearly shows that larger AFSLs are experiencing the most severe decline:

• The Fastest Falling: AFSLs with 101–250 advisers saw their adviser numbers decrease by a massive 15.2% over the 12 months.

• The Big End’s Struggle: The largest group (more than 250 advisers) also saw a decline of 2.5%.

  
  

Conversely, smaller and mid-sized groups are demonstrating resilience and growth, indicating a shift towards boutique or focused advice practices:

• The Fastest Growing: The mid-range AFSLs with 51–100 advisers were the best performers, growing their numbers by 7.7% over the year to June 2025.

• The Smallest Still Win: The smallest AFSLs (those with 1–2 advisers) and the 3–10 adviser groups collectively increased their total number of advisers by 3% over the year. The smallest group (1–2 advisers) grew by 1.5%.

  
  

This trend suggests that post-Royal Commission and FASEA reforms, scale no longer guarantees success, and the flexibility, culture, and fee structures offered by smaller and mid-sized AFSLs are proving more attractive to advisers.

AFSL Numbers: Stable Amidst the Chaos

Despite the movement of advisers between licensees, the total number of advice licensees (AFSLs) remains relatively stable, suggesting new boutique groups are constantly being formed while existing ones are remaining viable.

• The total number of advice licensees rose slightly by 0.3% during the 12-month period and now sits at 1,871.

• During the June quarter alone, the number of AFSLs rose by 0.2%.

• AFSL numbers appear to have plateaued just under 1,900, after being above 2,000 as recently as March 2022.

  
  

This stability suggests as large networks shed advisers, many are not exiting the industry entirely but are instead joining smaller groups or setting up their own licensing businesses.

The Growth Anomaly: Super Fund-Owned AFSLs

One notable outlier to the overall market contraction is the growth seen in advice provided through super fund-owned AFSLs. 

• Registered advisers operating through super fund-owned AFSLs rose by 4.8% over the 12 months to June 2025.

• This was the second-fastest growing segment, trailing only the 51–100 adviser AFSL size group.

  
  

This growth aligns with the broader move towards vertically integrated (though not bank-owned) models focused on providing advice to their member base, further challenging the historical dominance of bank and insurer-aligned models.

The New Adviser Ecosystem

The data paints a picture of a financial advice market that is highly fragmented and in a state of continuous rearrangement. The ability of smaller and mid-sized AFSLs to grow suggests they are successfully navigating regulatory demands and providing compelling value propositions to advisers who have left the collapsing institutional networks. The future of advice will likely be defined not by a handful of enormous licensees but by a competitive, more diverse landscape of independent and specialised firms.

Considering a shift in your practice, or looking for an AFSL that truly understands today’s market dynamics?

Get in touch with us today for a confidential discussion on how our model is built for the future of financial advice.