Revenues across Australia’s financial planning and investment sector are expected to increase by close to 10 per cent in the next five years to reach $7.47 billion, an industry report has predicted.
The IBISWorld industry report ‘Financial Planning & Investment Advice in Australia’ has forecast a 7.0 per cent increase in industry revenue in the five years through 2016/2017.
The report, released earlier this year, also predicted that profit across the industry will also improve.
“[It will increase] from 37.7 per cent of revenue in 2011-12 to a forecast 44.5 per cent in 2016-17 as high demand for financial advice and a rebounding investment market bring about a period of prosperity for financial planners and investment advisers,” IBISWorld industry analyst Tim Stephen said.
The industry is entering a new era after it had “barely recovered” from the global financial crisis, Stephen said.
“A drop in the value of assets under advice as share markets plunged and a fall in new fund inflows as investor confidence withered caused both revenue and profit to fall in 2008-09,” he said.
Stephen said while elements of the sector have begun to turn around, industry revenue is expected to decline by 4.0 per cent per year in the half decade through 2011-12.
“The industry is expected to perform more strongly in 2011-12, with revenue forecast to grow by a healthy 5.2 per cent to $5.32 billion as funds under advice grows and demand bounces back,” he said.
As well as making comment on the sector’s revenue, the report also predicted there will be about 17,300 financial advisers in the industry in 2011-12.
The figure is expected to grow by 1.3 per cent per year over the five years through 2011-12 despite industry revenue contracting.
“The future may hold some upheavals in the structure of the industry. Despite this, demographic trends, superannuation legislation and the complexity of the financial environment will support growing demand for financial advice,” Stephen said.
“IBISWorld expects that greater transparency, professionalism and client confidence as a result of the proposed regulation changes will benefit industry players.”
