Retail to dominate financial services distribution
A clear majority of money in Australia’s financial services markets will come from retail distribution channels by 2010, according to a report by Rice Kachor Re-search.
A clear majority of money in Australia’s financial services markets will come from retail distribution channels by 2010, according to a report by Rice Kachor Re-search.
Almost two thirds (65 per cent) of the $1.2 trillion market in 2010 will come from retail sources, according to the report. At the end of last year, a little more than half (52 per cent) of the $516 billion under management came via retail channels.
Superannuation will continue to dominate the industry both the wholesale and re-tail sides of the market. Infact, Rice Kachor predicts that the retail superannuation market will surpass the wholesale superannuation market in funds under admini-stration, mainly thasnks to growth in self managed super and master trusts. The re-search house predicts retail superannuation will be worth $516 billion compared to wholesale’s $394 billion. At the moment, wholesale superannuation stands at $235 billion, compared to retail superannuation at $175 billion.
While superannuation will be the key growth engine for the industry, according to the study, the most spectacular growth will come from allocated pensions and an-nuities. The total post retirement market is expected to more than quadruple from its current level of $29 billion to $127 billion by 2010. Allocated pensions are ex-pected to swell from $20 billion to $86 billion while annuities are predicted to rise from $9 billion currently to $41 billion in 2010.
On the flipside to the hothouses of allocated pensions and annuities is insurance bonds and savings plans. Insurance bonds are expected to shrink from current lev-els of $11 billion to $5 billion while savings plans will fall further from $3.5 billion currently to $1.5 billion in 2010.
Life insurance products are expected to grow at about the same rate of the overall financial services market and remain firmly in the hands of the retail market. Retail disability insurance is expected to nearly double to $2.6 billion, while group dis-ability (or salary continuance) is tipped to triple to $900 million.
Both retail and wholesale life and trauma cover is expected to more than triple to $10.5 billion in the case of retail and $$1.7 billion in the case of group life.
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