IFA chief executive Fred Dodds said it was possible that adviser numbers could drop by 60 per cent between now and 2024, as an ageing workforce combined with new regulation, roboadvice and a drop in risk commissions.

He said it seemed unlikely that risk commissions could continue at their current rate.

There are 1800 AFAs and 6400 RFAs in the market.

Many RFAs might not think it worthwhile to transition to higher requirements under the new legislation, Dodds said.

Scott Black, chief executive of Share, agreed how significant the fall could be would depend on how the new regime was implemented.

He said it remained to be seen how hard it would be for individual advisers to become licensed financial advice providers.

“All of the adviser groups have indicated that they will apply to become licensed entities, but many of the larger ones have said that their licence will not cover all of their advisers – so what happens to the balance of the advisers?

"They will have to find another FAP to join - and if they have not been taken on by their existing adviser group, then why would any other group want to assume that liability - or they will have to become their own FAP or alternatively group together with other adviser and form a FAP. That only becomes realistic if the cost and complexity of becoming a FAP for individuals or small groups is manageable.”

The competency requirements of the new code of conduct would also play a part, he said.

“For part-time and/or older advisers, if they determine that the education pathway is too difficult, it might be the catalyst to bring forward their retirement. A survey of 250 advisers recently indicated that as many as 23% of the advisers weren’t sure if they would still be in business in three years.

"A lot of that response may be fear of the unknown, but equally we could easily see a drop in numbers by between 10% and 15%.”

It would also depend on how banks and insurers responded, he said.

It was yet to be seen whether banks would want to continue to invest in their QFE adviser with increased compliance liability and potential education costs.

“The Aussie-based banks are all divesting their wealth management operation, will this be the catalyst for the New Zealand banks to drastically reduce their exposure in this area?

"Will the insurance companies retain their QFE advisers, or even look to establish new FAPs to provide a safe haven for high producing – but arguably ‘risky’ financial advisers who are cut loose from the adviser groups?”

A spokesperson for the Ministry of Business, Innovation and Employment said improving access to advice was one of the purposes of the Financial Services Legislation Amendment Bill.

“The bill includes arrangements that will allow existing industry participants to transition smoothly to the new regime. This includes a competency safe harbour under which existing industry participants can continue to provide advice while working to meet any new competence standards.”