Industry leaders have forecast an increase in the provision of scaled advice in the next several years, but an overall reduction in the number of planners, according to the Financial Services Council (FSC) and PwC 2011 CEO Report.
The survey, released at the FSC annual conference, found that chief executives of top Australian financial services companies expected a surge in the take-up of limited advice models by planners as the biggest change for the industry in the next five years.
Financial Services and Superannuation Minister Bill Shorten has already pledged to facilitate the expansion of scaled advice both within and outside of superannuation as part of the government's Future of Financial Advice (FOFA) reforms package.
Last month, dealer group AMP launched a scaled advice model called My Money Choices across its AMP Financial Planning and Hillross units, targeting consumers who are worried about a specific financial issue, but not prepared to seek comprehensive advice.
"The chief executives had a strong view that whoever achieved a scaleable advice model would have a distinct competitive advantage," the survey said.
Infocus managing director Darren Steinhardt said scaled advice would become more important as the industry recognised consumers wanted advice that was not only fit for purpose but also timely and understandable.
"We remain committed to offering a holistic service to our clients, but recognise that consumers demand new approaches to delivery. However, there continues to be confusion around how scaled advice will work and we will obviously keep abreast of developments," Steinhardt said.
The report also found increased regulation was expected to drive planners out of the industry, make advice costlier and reduce access to advice.
"Most chief executives anticipate a reduction in the number of independent advisers and licensees primarily due to the burden of increased regulation in addition to the aging of the financial planning cohort," it said.
PwC wealth management industry leader Andrew Wilson said the current spate of merger and acquisition activity among dealer groups and superannuation funds, changing investor behaviour following the global financial crisis, and the government's FOFA and Stronger Super reforms were reshaping the industry.
"Whilst views on the impact of these proposals diverge, a material number of industry players argue that the measures will increase the cost of providing financial advice and reduce the capacity of independent and non-aligned groups to operate profitable planning and insurance practices," Wilson said.
"The view that the reforms will favour vertically integrated business models would seem to have validity, at least in the absence of proactive measures and innovation from the more specialised players.
"Further, it is now clear that the proposed ban on volume-related payments from platforms to dealer groups and advisers will impact the viability of business models reliant on these payments."
The survey represents the views of 31 chief executives, representing around 80 per cent of Australia's $1.8 trillion in assets under management.
