The number of independent financial advisers is diminishing due to the continued domination of institutionally-owned dealer groups along with the multiple merger and acquisition announcements in the industry in 2011.
“What it does is gives clients less choice because at the end of the day, you’re more likely going to an adviser who’s with a dealer group who’s ultimately owned by one of these big institutions,” eJobs Recruitment Specialists managing director and financial planning recruitment manager Trevor Punnett said.
“Until there’s stability in the industry and until clients start coming back into the fray, then there’s uncertainty.
“All markets pick up sometime or another when stability comes back, and when that [day] comes, clients will be more willing to look at the independent financial advisers than financial planners that are linked to a dealer group linked with institutional products.”
He said the top five groups accounted for over 90 per cent of advisers in the country.
“At some stage there’ll be a backlash when markets settle down and customers might trend to someone that is more independent,” he said.
He said there was room for an independent sector, but in the current market and regulatory environment, many did not want to run their own business due to the increased risks.
“It’s a lot of hard work,” he said.
“There are less people willing to go through hassle and hoops in terms of compliance, compliance costs, risks, managing staff, research – all the hats that one needs to wear as a principal of an independent practice, and the rewards aren’t there at the moment.”
Independent financial planners had had it tough since the global financial crisis as jobs dropped off severely after November 2008 and failed to recover by early 2009.
He said the slight growth in 2010 and 2011 improved the situation, but those positions were for institutional and bank-aligned practices.
