Shifting consumer dynamics will have a greater impact on the number of bank-owned versus non-institutional financial planning businesses than regulatory reform, according to the head of a leading Australian institutional licensee.
James Meade, general manager of Garvan and MLC Financial Planning, agrees the industry is cyclical in the way financial planners shift between institutionally owned and non-bank aligned practices depending on regulatory certainty and other market variables.
“A lot of [current industry change] is driven by consumers,” Meade says. “During periods of uncertainty, they want the safe harbour of a bigger name.”
Asked whether he expects to see a substantial increase in the number of non-institutional financial planning practices any time soon, he says: “I don’t think we’re at that point yet.”
Looking at the planner numbers within his own group, Meade says he doesn’t expect they will grow substantially in the near future. MLC Financial Planning currently employs around 360 advisers, up from around 190 between 2010 and 2012.
“Back then, adviser numbers grew by about 100…we’re not as focused on recruitment [currently],” Meade adds. If anything, he expects the group could see a slight drop in adviser numbers over the next one to two years.
Changing consumer engagement
“I think the bigger change will be at the consumer end, not the business end,” Meade says. He refers to demand for financial advice that is being driven by Australia’s ageing population and large retiree segment.
Meade believes the industry is witnessing a changing mode of engagement with the consumer. At Garvan and MLC Financial Planning, he says this is manifesting itself in the increased prevalence of scaled and online financial advice.
“We want to focus on giving people lite or small-touch advice…and we need to work out how to support advisers in doing that. You’ve got to give the client the option,” Meade says.
A large part of this has involved ramping up technology to increase the efficiency of delivering financial advice.
He explains that over the last 12-18 months, MLC and Garvan advisers have been able to provide this segmented advice, which has been “very well regarded by the advisers who’ve used it.”
Convergence
Meade also notes that convergence between financial planners, accountants and mortgage brokers is growing within the industry.
“The leading practices are moving down that path,” he says. “If you think about the whole financial planning process, the first thing you’ve got to get right [for your client] is cash flow. Debt is a huge part of it. My view is that advisers need to find a way to do it.”
