Joint accounting and advice firms predicted to dominate advice space
The exodus of large institutions from the financial advice space and the changing regulatory environment is prompting a move towards converged accounting and advice firms, according to recent research.
A CountPlus whitepaper, based on CoreData research, has found that financial advisers are migrating away from larger institutions to non-aligned financial advice businesses.
The whitepaper said a core predictor of future success in the financial advice arena is the rate by which professional practitioners – accountants and financial advisers – can merge within a rapidly forming, entirely new space that is defined by alignment with true professionalism and quality advice outcomes.
CountPlus chief executive Matthew Rowe said that as financial advice evolves into a profession, the value chain is shifting.
“Large institutions are exiting their financial advice interests, leaving more space for converged advice and accounting firms to become dominant,” he said.
“Their independence will put them in an increasingly powerful position.”
Despite revelations of poor conduct unearthed by the Hayne royal commission, the whitepaper also revealed that most advised Australians believe they receive good value for fees paid to their financial advisers.
The research found more than two-thirds of people “strongly agree” or “agree” that they receive good value from their financial adviser, while only 8.2 per cent of people “strongly disagree” or “disagree” that they receive good value.
However, Mr Rowe points to challenges ahead for advice firms including a mix of community, economic and regulatory pressures.
“These elements provide a ‘perfect storm’ scenario that, together with the uncertainty of federal politics in an election year, creates an environment for rapid change,” he said.
“Businesses that emerge from the changing landscape will be better-placed than ever before to thrive in a new world of professionalism underpinned by higher educational, professional and ethical standards and stricter regulation.”
Mr Rowe said the natural home for such advice firms is defined not only by a culture of quality outcomes in the best interest of the client, but which promotes the value of a professional network deriving ‘purposeful’ economic benefit from systematic business and professional synergies.
“In other words, the natural home for this new advice paradigm to flourish is within the licensee that is purpose-designed to prioritise and sustain quality advice,” he said.
“Such organisations would already have separated product from advice, have established the required standards through investment in the best technological, business and regulatory processes, and which encourage strong values and standards to effectively shun poor behaviours and reject sales-based product models.”