Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

Small advice firms networking is ‘powder keg waiting to explode’

KPMG/viridian/advice-firms/

22 November 2021
| By Liam Cormican |
image
image image
expand image

As adviser numbers shrink and compliance costs increase, smaller advisories will form networked partnerships, sharing knowledge and technology to help them drive down costs, according to Viridian Advisory.

Speaking to Money Management, Glenn Calder, chief executive at Melbourne-based Viridian Advisory, said there were a lot of companies with mismatched product and advice solutions which could benefit from these networks.

He said the networking of smaller firms was a powder keg waiting to explode and he predicted the phenomenon would accelerate in the first half of next year.

“We would have seen four businesses approach us in the last month or so just saying ‘we’re too small to go it alone, maybe we should band together’ – so it’s already happening right now,” Calder said.

He said smaller firms had no choice but to act on technology solutions as rising costs and a shrinking advice industry meant smaller firms were “heading down a highway that ends”.

According to data from research house Adviser Ratings, adviser numbers were estimated to drop to 13,000 by the end of 2023, a 53% decline since the commencement of the Hayne Royal Commission.

Data from KPMG showed the average cost to produce advice was around $5,335 while the average adviser only charged $3,660.

Calder said those firms who were too small to merge with larger ones or who were not able to chase high-net-worth client niches could be left behind if they failed to adopt technology innovations.

According to Calder, Viridian had benefitted enormously from the sharing of knowledge and technology between firms in the BT Principal’s Community – Westpac’s network of advisers which would shut down its operations in mid-December with many members expected to join Kon Costas’ ‘The Principal’s Community’.

These networks would develop technology, product and advice solutions and share the costs across members, driving down overall costs for smaller firms which would be passed onto the consumer, said Calder.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

The succession dilemma is more than just a matter of commitments.This isn’t simply about younger vs. older advisers. It’...

13 hours 50 minutes ago

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

3 weeks 4 days ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 month ago

After last month’s surprise hold, the Reserve Bank of Australia has announced its latest interest rate decision....

3 weeks 6 days ago

ASIC has released the results of the latest adviser exam, with August’s pass mark improving on the sitting from a year ago. ...

3 days 7 hours ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

1 week 5 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND