Centurion Market Makers chief executive Chris Wrightson said he is seeing an obvious converging of businesses over the next five years as the trend towards disaggregation continues.
“Our view is that if you look forward five years you’ll see [planning and brokering] businesses converging and trying to service each other’s customer base because it’s all about trying to make more money by delivering more services to your customers,” Mr Wrightson told InvestorDaily.
“We say, if you’re a planner providing planning services, maybe you also need to provide brokering services to your clients as well.
“The easiest way to do that is find an experienced finance broker and get them to do the work for your client base but then also vice versa, providing financial advice to their clients,” he said.
He explained that in an environment where disaggregation has started and practices are beginning to move away from institutional licensees and return to boutique self-licensed entities, expanding the business model and adopting a horizontal approach is important.
This is accentuated by impending FOFA reforms due on 1 July next year.
“FOFA is making it harder to make money by removing revenue schemes that were previously in the industry so then businesses have to adapt,” Mr Wrightson said.
“We see that more in the managed discretionary advice space,” he said.
Mr Wrightson also said he is seeing a trend for the return of investment management inside boutique financial planning IFAs.
“My view is that this horizontal integration will accelerate migration away from restrictive institutional models and is already proving to be the catalyst for the re-emergence of the IFA,” he said.
“In a FOFA environment all integrated models will need to be mindful of their best interests, duty and the conflicted remuneration guidelines. I think FOFA is still subject to some fine tuning.”
