Clients will reshape the financial planning industry over the next four to five years, and business models born out of accounting firms are likely to dominate, according to David Fox, principal of Advice Centre Consulting (ACC).
Speaking at the NSW Financial Planning Association (FPA) Chapter “Advising 2020 and Beyond” discussion group, Fox said the growing realisation of the need for advice from more demanding clients would be “the single biggest influence on the advice industry in the next five years”.
Fox believes three business models will dominate the advice industry in 2012: the advice centre model; the integrated financial services model; and the advice partnership model.
The two larger models – the advice centre model and the integrated financial services model – are likely to evolve from second- and third-tier accounting firms who build and broaden their advice delivery capability.
The third will be the smaller of the three dominating models but will typically generate $7 million in revenue in 2012 and provide multiple components of advice to clients through both internal advice delivery capabilities and by forming alliances with “advice partners” residing outside the business, he says.
Fox says the key trends emerging in businesses that are positioning themselves for exponential growth and industry domination include genuine client centricity, the separation of accountability for sales and marketing, the growing need for a superior business management capability and a move, albeit slowly, to value-based pricing.