Warning on homogenisation of industry

Recent buying activities by the major financial institutions are threatening to kill off boutique fund managers, according to the chief executive of Premium Wealth Management, Chris Saunders.

Saunders said the boutique fund managers were in danger of not being able to compete in a homogenised investment industry.

“With the financial services industry contracting due to large scale buy-outs from the banks and other institutions, maintaining diversity and independence within our industry — both dealer groups and fund managers — should become a key objective for those of us who remain independent,” he said.

Saunders sought to reinforce his concerns about the increasing dominance of the major institutions by referring to the Australian Securities and Investments Commission submission to the Parliamentary Joint Committee of Inquiry on Corporations and Financial Services, which asserted that 85 per cent of Australian financial advisory businesses were now associated with product manufacturers.

However he claimed that, regardless of what changes might flow from the recommendations of the Parliamentary Inquiry, the financial planning industry had already changed thanks to the global financial crisis and the swallowing of boutiques by major institutions.

Saunders claimed it was in these circumstances that boutique fund managers needed to collaborate closely with independent advisors, rather than offering “me-too products”.

He said the boutiques needed to offer products and services of value to advisors and their clients.