New research cautions banks on exiting wealth
The major banks would be wrong to completely turn their backs on high value clients, even though they are exiting elements of wealth management, according to the latest research from Roy Morgan.
The research, released today, reveals that nearly two million Australians have used a financial planner to purchase superannuation or managed funds but it is those in the top quintile that need most focus.
The research company has released the results of its latest Profile of Users of Financial Planners Report, which reveals that the nearly two million people using planners account for $703 billion in total wealth management products and have an average value of nearly $360,000.
Analysing its findings, Roy Morgan said these people represented a key segment requiring increased attention and detailed analysis from the major market participants, particularly at a time when there was a lot of talk about them leaving the industry or merging.
The Roy Morgan research found that one third of wealth management customers who were in the top 20 per cent of the market by value had used a financial planner.
“Although the top quintile by definition accounts for only 20 per cent of wealth management customers, they are responsible for nearly two thirds (63.9 per cent) of the total market value of superannuation and managed funds,” it said.
It found that the other groups that had above average use of financial planners/advisors included those with incomes of $130,000 or more (22.1 per cent), Baby Boomers (18.5 per cent), those aged 50 and over (16.6 per cent), Pre-Boomers (15.8 per cent) and the AB Socio Economic Quintile (13.7 per cent).
Commenting on the research, Roy Morgan industry communications director, Norman Morris pointing to the moves by the major banks to either exit the financial planning market or merge and suggested there was a risk they would end up weakening their relationships with customers.
“Any weakening of existing planning or banking relationships would leave the way clear for new entrants such as Fintechs to enter the market,” he said.
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