In our latest poll, advisers generally believe that as a result of the Global Financial Crisis, there will be a contraction in the number of practices offering financial planning advice.
Responding to the question:
- Do you agree that the Global Financial Crisis will result in a consolidation of the number of financial advice practices in Australia?
71 per cent of advisers said they do agree the number of practices will decline. The other 29 per cent of advisers taking this poll believe this will not be the case, or are uncertain about what will happen to practice numbers over the short to medium term.
Feedback from one adviser suggests that a natural cycle will see the regeneration of smaller, boutique practices as economic conditions improve:
“Some will merge with larger practices and others will disappear all together but at the same time new smaller practices will be formed. Financial Planning is a relationship based industry and history has shown us that clients prefer to deal with smaller practices (even if they are part of a larger group).”
“Some will merge with larger practices and others will disappear all together but at the same time new smaller practices will be formed…”
Other comments suggest smaller practices will need to re-define their advice and/or service proposition in order to survive:
“… those boutiques that sprout from the consolidation of others need a value proposition that is compelling to clients. This may be a relationship based value proposition or via technological innovation. Either way not all will survive in their current guise.”
The sense we have received from the poll results and other feedback so far is that the nature of financial advice, like the economy, is a process that is subject to cycles.
At the moment there appears to be a consolidation phase in terms of the number of advice practices, but, just as economic analysyts are now refering to the ‘green shoots’ of economic recovery, so too is there a sense that new boutique advice practices will emerge from this consolidation process to fill a void that is being created in the area of smaller, boutique advice practices.
The newly formed boutique practice will probably offer a different, more contemporary ‘value proposition’, and this will in turn reflect the cyclical, or ‘regenerative’ nature of financial advice in the 21st century.
Our poll remains open, so if you have yet to add your opinion, it’s not too late. You can also add your own comments below:
