Smaller financial services companies need to step up to remain competitive against Australia's'big four' banking groups by concentrating on vertical integration and encouraging younger planners to join the business.
Chan & Naylor chief executive and executive director David Naylor said that the baby-boomer generation is exiting the workforce and less specialist university courses means the talent pool for financial services is drying up.
Smaller firms should be concentrating on encouraging the younger generation to join, he said.
"Larger organizations - the 'big four' - are offering unprecedented starting salaries, overseas internships and incentive-based remuneration to woo new graduates," Naylor said.
"So can 'high-street' financial service firms compete? Yes, is the simple answer. Smaller organisations allow younger members of the team to quickly climb the corporate ladder and become big fish in a small pond, satisfying ambition and providing broader experience.
"Chan & Naylor is proactively challenging our younger team to get more involved in day-to-day business and to contribute to the evolution of the firm."
Fiducian Portfolio Services managing director Indy Singh agreed, but said there are also other factors to consider.
"I think it is always good to have younger players come into the industry," Singh told InvestorDaily.
"The younger generation bring new ideas and new angles to the table."
But the smaller company has to have a vertically integrated business offering to remain competitive, he explained.
Smaller groups should focus on being niche and specialist to stand out among the large groups who may offer a 'one-size-fits-all' approach, he said.
"It must be [important] because the market hasn't been very favourable; mum and dad investors are quite shell-shocked and sitting on a lot of cash," Singh said.
"If you are not competitive then your clients suffer, so it is extremely important. You need to remain profitable and competitive," he said.
Futuro Financial Services managing director Dennis Bashford notes that financial planning is moving into a different environment. Companies need to either join the 'big four' or change the way they do their business to compete.
"[The 'big four' are] very effective at bringing in new blood. They are prepared to spend the time and money to get people up to speed," Bashford said.
In order for smaller financial services companies to compete they need to be on par and increase their offerings to the younger planners.
"Once upon a time, to be reasonably successful in our business and to make a good living, you had to be a good people person - what is happening now is being a good people person is not quite enough if you want to maintain the earnings and profitability of your business. You have to stop becoming a practitioner and start becoming a business [person]," Bashford said.
"People have to revisit the way they conduct their business."
Australia's big four banks are ANZ, Commonwealth Bank of Australia, National Australia Bank and Westpac.
