Many advisers believe their numbers will reduce considerably after commissions are banned in 2012, according to findings by Investment Trends.
The rersearcher’s’ May 2010 SMSF Planner Report reveals that 57% of the 472 advisers it surveyed expect some planners will exit the industry due to the banning of commissions from 1 July 2012, while 28% expect many planners will leave the industry.
But while more than half expected adviser ‘rationalisation’, the survey found only 3% of respondents said that they expect to leave the industry within the next two years and only 5% said they expect to retire sooner than planned.
Many advisers also expect to see a reduction in the number of boutique firms, with 40% expecting consolidation among smaller dealer groups and 33% expecting the larger dealer groups to take over the smaller ones.
The survey reports that half of those surveyed believe removing commissions in 2012 will benefit the industry, but half also feel that the ban will adversely impact their own business, with 34% expecting it to have a small negative impact on them, and 12% saying that there will be a significant negative impact.
… 45% said they will not be able to support as many lower balance clients …
Many advisers also believe the transition to fee for service will not be a smooth one for investors. 54% of planners say that fee for service advice will be too expensive for some clients, and specifically 45% said they will not be able to support as many lower balance clients in a fee for service environment.
Investment Trends Analyst, Recep Peker, commented “Planners are signalling that lower balance investors may be the most affected by this decision. However, the resulting gap may accelerate the growth of new models for providing defined scope advice; where investors will be able to obtain advice pertaining to specific needs at lower costs.”
Mr Peker cites technology as an enabling factor that can in future assist in providing more streamlined advice delivery around particular transactions or needs such as super switching and transition to retirement.
