Independence critical for advice industry

M&A activity strong

By Julie May
Tue 23 Feb 2010

Independence will become a point of difference as consolidation in the advice industry continues.

The need to showcase independence is going to be a valuable point of difference as the advice market becomes even more dominated by big players, business broker Kenyon Prendeville director Alan Kenyon has said.

"With the big getting bigger and the possibility that advice could also become more homogenous, it's possible that there will be an increase in boutique groups as a backlash to the consolidation activity by the big players," Kenyon told InvestorDaily.

With National Australia Bank (NAB) acquiring a stake in Aviva Australia, Millennium3 acquiring a stake in Elders Financial Planning, Westpac acquiring St George, and AMP and NAB both making plays for Axa, a larger and more sophisticated boutique market could eventuate on the back of this, Kenyon said.

"It is interesting because on the one hand you have consumers, regulators and protection agencies looking for greater independence and transparency, whereas on the other hand you've got an industry which in many respects is gobbling itself up," he said.

"Due to the sheer size of some of the larger organisations, it could become very difficult for them to be flexible enough to accommodate the more entrepreneurial and broader offerings that some planners working in the top end of the market require.

"In that respect, there might be a disconnect between what we think the larger groups can offer and what the boutique market actually needs."

If consolidation continued at this pace, Kenyon said bigger institutions needed to invest in technology so that they could offer a broader range of products and services like individually managed accounts and managed discretionary accounts, otherwise it could mean less choice for consumers.

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