The next three years will mark a critical impasse for Australia’s financial service industry with speculation that close to 30 per cent of financial advisers are set to exit amid looming regulatory change and increased costs.
“It’s our view that the next three years is going to be the biggest land grab opportunity in the wealth management space for those organisations that can adapt,” DKN Financial Group chief executive Phil Butterworth said.
Butterworth told delegates at yesterday’s Financial Services Council (FSC) conference in Melbourne that the next few years will bring increased challenges of rising costs, and responsibility around research that not all financial advisers are willing to face.
“Once again, the land grab for those firms that can actually create themselves as firms rather than sole practitioners or the like have a great opportunity of securing a greater share of the market place because there will be a number of advisers leaving the market over the next three years,” he said.
BT Financial Group head of dealer groups Neil Younger echoed Butterworth’s comments on market change, claiming around 20 to 30 per cent of advisers may choose to exit in the coming years.
“I think the real issue at the moment in the mind of advisers is sustainability of their current business models. I think that’s quite unsettling for a large segment of our advice industry,” Younger said.
“I do think we will see a significant number of advisers leave the industry based on the age profile we see across the market place.”
Younger said advisers who chose to specialise in segments such as high net wealth would be better positioned to weather any regulatory change than those seeking to service the low-cost advice market.
“In the IFA (independent financial adviser) environment I think it’s difficult to see advisers continuing to operate effectively in the low dollar cost value client segment,” he said.
“I think this segment will be increasingly serviced by product providers, through either intra-fund or intra-product style advice solutions.”
