Instability and reforms will put pressure on dealer groups
Market instability and the upcoming Sherry reforms will create a pincer movement of pressure on public offer dealer groups to reduce their costs and force them to become more efficient, according to Tony McDonald, the managing director of Snowball Group.
The clarion call for dealer groups in the next five years would be efficiency, McDonald said, as dealer groups who were not efficient would be driven out of the marketplace.
The days of a “1,000 different little practices doing their own thing” was over, McDonald said. Dealer groups need to reform their models to increase their efficiency, as well as offer group services to advisers who behaved in a certain way.
He noted that dealer groups needed to become more corporatised, and they would need to find a balance between aggregation and the freedom of financial planners to offer differing models of advice. Making their businesses more efficient would give dealer groups an increased hold over their clients at a time when consumer power was increasing, McDonald said.
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