The industry is moving away from trailing commissions towards a fee-for-service model
Melbourne, Australia (PRWEB) May 08, 2012
The Financial Planning and Investment Advice industry is on the cusp of fundamental change. Following a swathe of advisory firm disasters, the government has announced an overhaul of the industry, addressing issues of conflicts of interest, transparency and duty to clients. The industry initially fought the impending new regulation, but has now largely accepted the changes, and many firms are making changes to their business models. According to IBISWorld industry analyst Tim Stephen, “A number of the larger dealer groups are already moving towards a fee-for-service based remuneration model, while distancing themselves from commissions”. The industry is entering this new era having barely recovered from the global financial crisis. Although things have begun to turn around, industry revenue is expected to decline at a compound annual rate of 4.4% in the five years through 2011-12. The industry is expected to perform resiliently in 2011-12, with revenue forecast to grow by a healthy 3.2% to $4.26 billion as funds under advice grows, and demand for industry services returns.
The industry comprises a handful of large firms and a vast number of individual proprietors. “The largest firms are the wealth management arms of large financial institutions, including banks and the dealer groups they own”, Stephen adds. The top four operators in the Financial Planning and Investment Advice industry are AMP, Westpac, ANZ and CBA. Market share concentration within the industry has been increasing mainly through the process of acquisitions and mergers. Industry consolidation is being driven largely by the economies of scale achieved by having larger numbers of financial planners within the same dealer group. The industry is consolidating as larger financial institutions increase the distribution of their financial products through larger dealer groups and cross-sell financial products. The various changes in industry structure, likely to result from the reviews into the financial advice and superannuation system currently underway, may favour larger institutions.
Over the next two years, the structure of the industry will shift significantly. Despite this, demographic trends, superannuation legislation and the complexity of the financial environment will support growing demand for financial advice. IBISWorld expects that greater transparency, professionalism and client confidence as a result of the proposed regulation changes will benefit industry players. In the five years through 2016-17, industry revenue is expected to grow. Profit will also improve as high demand for financial advice and a rebounding investment market bring about a period of prosperity for financial planners and investment advisers.
For more information, visit IBISWorld’s Financial Planning and Investment Advice report in Australia industry page.
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IBISWorld industry Report Key Topics
Establishments in this industry provide financial planning and advice to clients.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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