The wealth management has seen an increase of $266 billion during the financial year 2020-21 despite the overall share in the financial services market declining by 0.9% points, according to Roy Morgan.
The sector accounted for over a quarter of the entire financial services market in Australia and was the second largest segment of the financial services sector
The firm’s ‘Banking and Finance Report’ found that Australia’s total market for financial services had grown by a record of over $1.27 trillion during the last financial year to $10.9 trillion in June, 2021.
At the same time, the wealth management segment, the second largest category after owner-occupied home, amounted to $3.06 trillion, accounting for 28.3% of the total market of financial services.
By contrast, traditional banking which was the fastest growing segment of the financial services market over the last year now represents 23.8% of all financial services with a value of $2.59 trillion while direct investments currently representing 12.8% of the financial services market with a value of $1.39 trillion, was up from a 12.1% share a year ago.
Michele Levine, chief executive officer, Roy Morgan, said that despite the COVID-19 pandemic and significant worries at that time about the durability of the Australian economy as well as key financial assets such as housing, stock-market investments and traditional banking and wealth management accounts, the majority of these fears proved largely unfounded.
According to Levine, even with the highly contagious Delta variant causing current lockdowns in all seven mainland Australian capital cities, fears about a financial crash receded as the vaccine target of 80% of the population fully vaccinated looked set to be released later this year.
“Since June 2020 the total size of Australia’s financial services market has increased at an extraordinary rate – up by $1.27 trillion to a value of almost $10.9 trillion in June 2021. This level of increase is even greater than the increase of $1.23 trillion over the preceding three years,” she said.
“All four main segments of financial services including owner occupied homes (35.2% of the financial services market), wealth management (28.2%), traditional banking (23.8%) and direct investments (12.8%) have increased by at least $200 billion in value from a year ago.
“Although the next few months are set to be tough ones for many Australians forced out of work by the lockdowns there is an optimistic view that once the vaccination thresholds are reached towards the end of this year the economy will quickly recover from this ‘third wave’ of COVID-19.”
Source: Roy Morgan Single Source (Australia) July 2016 – June 2021