The bid by private equity firm Kohlberg Kravis Roberts (KKR) for Perpetual has sparked talks about other possible takeovers in Australia's wealth management industry.

While private equity firms have sought to buy local retail firms or a national airline, the country's wealth management sector has largely been ignored.

"It certainly was very unusual. I wouldn't think it's your usual private equity target. I cannot recall a bid like that occurring in the wealth management industry," Morningstar senior equities analyst David Walker said.

According to a report from UBS, the deal does not look and feel like a typical private equity deal because the financial services industry in Australia is heavily contested and fragmented, rather than having high barriers to entry and being stable and concentrated.

For Walker, however, any merger and acquisition activity in wealth management will remain subdued.

"The market rally in wealth management stocks that happened after the bid was announced on Monday indicates that financial services companies are undervalued," he said.

However, Walker said it would still be very hard to see any merger and acquisition activity in financial services because of the nature of the assets behind financial services companies.

"Assets in financial services are people, culture and brand equity that all work together to support the investment processes. There are a lot of egos and strong personalities in the industry that would make mergers unlikely," he said.

Regulation has also stalled a number of mergers. Most notably, the Australian Competition and Consumer Commission put a stop to National Australia Bank buying Axa Asia Pacific Holdings.

Walker said AMP at this stage is not in a position to bid on Axa.

While a mid-tier firm like IOOF may be a takeover target, Walker said a bid for a firm such as this would also be unlikely as "it would have happened by now".

However, consolidation is likely to occur among smaller firms in the wealth management sector, particularly those firms that specialise in financial planning.

The ban on commissions has squeezed advice firms out of the sector.

The big wealth management firms will also be better positioned to deliver the government's low-cost superannuation product MySuper through their extensive branch networks and tied advice businesses.

"These regulatory changes will mean more consolidation among the smaller players. Only the big and strong will be able to survive," Walker said.