Financial services business model changes are inevitable as an increasing trend towards disaggregation is likely following the Future of Financial Advice (FOFA) reforms.
Centurion Market Makers chief executive Chris Wrightson said 82 per cent of self-employed practices now resided inside institutionally-owned dealers.
“The advisers didn’t choose it; it is just how it happened. So they are all sitting there in these vertically-integrated businesses, but what we see is an evolution of new business models and they are going to attract people out of those big five companies; disaggregation,” Wrightson told InvestorDaily.
“We do see that happening over the next two years definitely. It has already started, in fact.”
He said once the dust settled on FOFA and practices worked through what was the most profitable model for their business and best offer for the client, there was likely to be a return of the independent financial adviser.
“In the last two business cycles I have seen aggregation in the advice space, followed by disaggregation as practice owners experience the reality of institutional ownership,” he said.
“I am confident … this current period of aggregation will be followed by disaggregation, regardless of grandfathering.”
He also noted new players were entering the market and offering a different business model to vertical integration.
“The fact that there is half dozen out there, they will get some traction over the next two years,” he said.
