Transitional licensing opens later this month for the new financial advice regime.

David Greenslade, founder of Strategi, said by June next year, when the new rules take effect, more than 2,000 transitional licenses will likely have been issued.

Two years later, 1,300 of those would go on to become full licensees.

By 2025, that would have dwindled to 850 due to economies of scale and consolidation, he said.

Five years later there would be just 400 left after a wave of mergers, acquisitions and rollups.

"This is similar to other professions such as doctors, dentists, vets, etc where the industry transitions from small, single-advisory businesses to medical centre-type arrangements.”

He said it would signal the dawning of commercial reality for adviser businesses.

“Some advisers, because of their age and stage, will exit the industry before the end of the transition period. The majority that apply will carry on but then we’ll see the reality of economies of scale like any other industry.”

He said it would not be a problem for the industry, however.

Technology would be able to counteract any perceived lack of ability to service clients, he said.

As businesses became bigger they could hire professional managers, which would allow advisers to focus on advice.

“Good advisers can spend more time with clients and get good outcomes.”