Advisers feel they are under ‘constant threat’
Financial advisers today are having to work harder and faster to futureproof their businesses, according to Allan Gray.
The fund manager found there were three common themes across its Australian, UK, and South African markets which were ongoing regulatory developments, technology advancements, fee scrutiny and questions around the benefit of advice.
Allan Gray Australia’s chief operating officer, JD de Lange, said it was “frightening” that one-third of advisers in a survey said that they would leave the industry within the next year or two.
He said the increasing compliance burden, a loss of revenue in the form of commissions or rebates, a drop in practice valuations, and the stress of meeting new educational requirements contributed to the situation in Australia.
“We last saw adviser sentiment this low in 2010 following the global financial crash and it makes it very hard to grow the industry and encourage new entrants to join because advisers feel under constant threat,” he said.
“There are about 10% fewer advice clients than five years ago, which has created fee pressure for advisers. As a result, advice has become extremely expensive even by Australian terms.
“In an asset-based-fee world, the discussions were more investment focused and price was a function of assets under management. Today an advice plan needs a structuring fee and an ongoing management fee both based on the value proposition offered by the adviser.
“A new proposal costs $3,600 or more to deliver, while the annual fee could easily be more than double that. This all means the adviser needs to have a very clear and quantifiable value proposition.”
Recommended for you
Far too few wealth managers are capitalising on the opportunity presented by disruptive technology to deliver personalised investment solutions to the mass affluent demographic, according to PwC.
With over half of advisers using managed accounts, HUB24’s head of managed portfolios has unpacked the benefits driving their usage and how they can be leveraged by advice practices.
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
ASX-listed platforms HUB24, Netwealth, and Praemium have used their AGMs to detail how they are using artificial intelligence to improve their processes and the innovative opportunities it presents.