An increased focus on direct investments, particularly from self-managed super fund (SMSF) clients, has led Instreet Investment to target the acquisition of private client stockbroking firms.
Instreet managing director George Lucas said the firm was looking at practices in the range of around $7 million to $10 million of revenue, and although some discussions were underway no practices had been confirmed so far.
The incentive, he said, was a growing movement away from managed funds towards direct equity investments – for example, where the financial adviser chose the stocks directly on behalf of clients.
A recent Macquarie Adviser Services survey supports Lucas' claim that there is an increasing shift away from managed funds towards direct investments, including where the adviser acts as stock picker.
Lucas said financial advisers are increasingly able to construct a portfolio purely through the ASX rather than through managed funds, via vehicles such as exchange-traded funds.
Financial advisers are also increasingly able to buy more advanced software off the shelf, allowing them to run the whole process internally, he said.
The appeal of the private client stockbroking firms is that they can deliver services direct to the independent financial adviser market, Lucas said, which is particularly appealing given the rapid growth in the SMSF sector.
"We deal mainly with advisers who advise on SMSFs," he said. "We want to be able to provide services to our client base, which is now looking more and more at direct equities," he said.
