Mixed year for mid-tier sector
Mid-tier dealer groups have turned in a mixed performance over the last 12 months as some grew faster than the more established players in the market, while others have lost on a number of fronts, according to the 2011 Money Management Dealer Group of the Year survey.
The survey found that mid-level players in the market, such as Sentry Financial Group and Aon Hewitt Financial Advice, added more advisers to their ranks than Commonwealth Financial Planning and AMP Financial Planning.
Seven out of the 10 dealer groups featured on the fastest growing list (see page 17) are medium-sized dealer groups who, judging by the growth rates, had shown positive sentiment ahead of the upcoming Future of Financial Advice reforms.
One of those is Synchron (sixth), which hired 32 advisers over the past year, despite its directors expressing concerns that the introduction of proposals such as the opt-in requirement and risk commissions ban within super would come at the expense of the advice industry and its clients.
On the other hand, mid-tier player AAA Financial Intelligence found itself third on the list of fastest shrinking dealer groups, losing 83 advisers.
Also on the list are institutionally owned Genesys Wealth Advisers, Hillross Financial Services, Securitor Financial Group and Macquarie Equities, with all but Securitor experiencing a big drop in funds under advice (FUA).
However, this year’s Top 100 Dealer Groups survey was dominated by institutions, particularly the big four banks, who have significantly ramped up their adviser numbers as FUA grew as well.
This might be explained by the Australian Securities and Investments Commission’s push for the introduction of scaled advice in a bid to make financial advice more accessible and affordable to clients.
AMP has officially introduced its scaled advice model after a 12-month pilot, while the big four are expected to follow suit - if they haven’t already.
Despite strong results in the institutional sector, jitters caused by global financial crisis remain, with a few players reporting a drop in FUA.
One of those is Macquarie Equities, which experienced a $928 million drop in FUA over the past year - something the company attributed to “sideways moving markets”. Nevertheless, the group still has $38.9 billion under advice.
Another trend noted in the dealer group space this year was adviser churn within large financial services institutions.
Head of Colonial First State Institute of Advice, John Carnevale (pictured), recently told Money Management that a 20 per cent adviser turn-over rate was reported within the big four banks, which is why the instos are ramping up adviser support programs to retain more talent.
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