Australia's wealth management sector continues to be held back by a lack of investor confidence, which has resulted in firms experiencing relatively little new business and low investment flows, according to an advice chief.
DKN Financial Group chief executive Phil Butterworth said the residual investor uncertainty stemmed from the global financial crisis (GFC).
"DKN continues to deliver stable returns to investors despite a difficult environment in the wealth management sector," Butterworth said.
"The industry is still held back by lack of confidence among investors experienced since the start of the GFC, which has translated into relatively little new business and low investment flows."
DKN recorded a 7 per cent drop in revenue for the half year to 31 December 2010 and a 9 per cent drop in underlying profit post tax for the same period.
The listed group did experience a positive lift in funds under administration (FUA) by 6.5 per cent to $7.92 billion since 30 June 2010.
"DKN anticipates that difficult conditions will continue in the market for the calendar year," Butterworth said.
"However, underlying growth through the attraction of new practices to the group is still evident and underpins directors' expectations that profit for the full year will exceed last year's result of $7.2 million."
He said the firm's existing advice network was also on track to being "reform ready" ahead of the government's proposed Future of Financial Advice (FOFA) legislation.
"This has involved a significant commitment from senior advisers and principals, which has had an impact on new business development for many practices," he said.
"Many of the DKN network commenced reviewing their service packaging and pricing over two years ago and are now well positioned ahead of a likely July introduction of legislation."
He said based on the information released to date on the FOFA reforms, DKN remained certain the proposal to ban commissions and volume-based payments would not impact on the fees DKN received under its existing distribution contracts with its core platforms.
"Clarity with regard to these reforms is much anticipated and we await the next round of discussions with government," he said.
"Until the lack of clarity surrounding legislative change is resolved, conditions for the sector will remain difficult."
