The Victorian Government’s call for financial planning services for up to 100,000 public sector super members is the most prominent example of what is destined to become a major trend within the planning industry.
The implications for planners, and more importantly dealer groups, are far reaching. Not only does it shine the spotlight on the demand for financial planners in the super system, but it also points to a new way of building up all-important client bases – the tender system.
Financial planners have long been at the peripheral of the superannuation system. There are a number of smaller dealer groups who have had the foresight to recognise the potential of the growing billions locked away in the system, but by and large, planners have tended to concentrate on the retiree and high net worth markets.
Now the tide seems to be turning. Some of the industry’s biggest names have thrown their hats in the ring for the opportunity to capture a foothold in corporate, industry and public sector superannuation. Just last week, we learned that 80 dealer groups had entered the tender to advise Victorian government employees on their super options. And the week before, Godfrey Pembroke and RetireInvest won the right to advise corporate clients of super admin giant Towers Perrin. There are also a number of other superannuation deals open to tender at the moment that offer advisers the opportunity to pitch their services directly to a large number of potential clients.
These sorts of deals are going to become increasingly common and increasingly important for financial planners. Banks long ago realised the potential of a massive database to trawl for financial planning clients and have structured their planning businesses to deal with a large number of clients with widely varying net worth. Dealer groups do not have the luxury of a large retail banking customer base but can align with other financial services customer bases such as super funds.
A few superannuation service providers, most notably Mercers and State Super, have set up their own financial planning arms to capitalise on the potential of this market but most have indicated they prefer to focus on their core business and leave financial planning for specialists. These groups tend to favour the tender process for outsourcing of services – as they do with investment managers and investment consultants.
The bright note to come out of this trend is that the superannuation industry is beginning to recognise the growing professionalsim of the financial planning industry.
The danger for financial planners is for those who have not geared their businesses up for superannuation and the tendering system who risk missing out on the huge opportunities opening up in this area.
