Relationship model re-emerging in advice space
Mid-tier dealer groups will have to support their financial advisers in creating different value-adds in the new regulatory environment to remain competitive, according to head of Guardian Advice, Simon Harris.
Harris was part of a discussion panel at the Association of Financial Advisers National Conference in Queensland, which delved into the current issues faced by licensees, big and small.
When asked what the mid-tier sector will have to do to compete with large institutionally-owned dealer groups, Harris said he saw two trends emerging, the first being a move back to the relationship-based business model.
"The other trend I'm noticing is…if we think about regulation, if we think about fee disclosure, for example, there's a need for advisers to better articulate value to their clients - and that might mean more actively managed portfolios," Harris said.
"For someone running a licensee, that scares the hell out of me - that I'm going to have advisers out there picking stocks instead of seeing clients," he added. "There is a place for dealer groups to create actively-managed portfolios and support that value-add to customers."
Forte Asset Management founder Steve Prendeville said some dealer groups would probably emulate the business model of larger institutions to survive the challenges of the future.
"The smaller groups will start to get involved in the full scale value, not just at the advice and the distribution part, but will also come to the platform and manufacturing space," Prendeville said.
"I think that's where the medium-size, smaller-size players will take on the larger ones, which somewhat copies their business model."
The panel, which also included Infocus Wealth Management founder Darren Steinhardt and chief executive officer of Lonsdale Financial Group Mark Stephen, concluded that the consolidation in the boutique space would continue in the next three-to-five years, and that the independent, mid-tier dealer groups would continue to be under pressure.
Recommended for you
Marking off its first year of operation, Perth-based advice firm Leeuwin Wealth is now looking to strengthen its position in the WA market, targeting organic growth and a strong regional presence.
Financial services software firm Iress has unveiled a new business efficiency program with the aim of permanently lifting its profit margin as the business enters a leaner, growth-focused phase.
AUSIEX has revealed the top traded stocks for October, noting significant jumps in advised investor trading, while ETFs also reported higher activity.
The Financial Advice Association Australia has implored advisers to reevaluate their exposure to AML/CTF obligations ahead of new reforms that will expand their compliance requirements significantly.
