The current US trend of small advice businesses breaking-off from larger, institutionally-owned players is likely to be replicated in Australia, according to one industry stakeholder.
SFG Australia’s Managing Director, Tony Fenning, said the group expected to see the emergence of a growing number of boutique Australian Financial Services License (AFSL) holders in the coming years, as a reaction to the recent industry consolidation, driven by the Future of Financial Advice reforms.
Mr Fenning said that, following a period of significant consolidation in the US financial services market, American advice business owners were now going back to their roots, and breaking away from the large organisations.
“Internationally, there’s plenty of evidence that what will happen next in Australia is a de-consolidation…” Mr Fenning said. “That typically comes when the large organisations start to get so big that they can’t focus on the needs of the individual or small teams.”
… there’s plenty of evidence that what will happen next in Australia is a de-consolidation
He said that the Australian market was going through a similar period of consolidation, “… where small businesses are suddenly having to deal with the big banks”. He believes this could result in a potential ‘cultural clash’, which would see advisers breaking away from large institutions in favour of running their own AFSL.
“The big guys have the advantage for the moment, but they’re not the natural player in this space. They get too big, they lose focus, and they don’t think like entrepreneurs,” Mr Fenning said.
Mr Fenning made these comments at the launch of SFG’s new advice service offering, Actuate Alliance Services, which is targeted at Australia’s boutique market.
Dan Powell, Head of Actuate, said: “Our vision is to be an enabling partner of progressive AFSLs, giving them the opportunity to build best of breed businesses by leveraging the considerable resources and advice solutions of SFG Australia.”
According to Mr Powell, there is a bright future ahead for forward-thinking, non-aligned AFSLs to thrive in a more demanding regulatory and consumer environment.
“It does, however, require these AFSLs to have clear and effective operating models that facilitate the delivery of best advice solutions to their clients while improving business efficiency and profitability. These things do not need to be mutually exclusive,” he said.
Licensees who sign-up to the new offer will receive a baseline package of advice solutions, which they can then add to from a selection of other services.
“One of the best things about Actuate is that AFSLs can choose what is right for them. We understand that they value their own brand,” Mr Powell said. “We want to help them manage the complexity of their practices so they can focus on providing value to their clients and succeed in growing their businesses.”
