Specialised practices a thing of the past

Specialised financial advice practices will be a thing of the past due to their unsustainable business models, according to Seaview Consulting's Bob Neill.

Neill said one of the major challenges confronting financial advice businesses would be to define the appropriate business model needed to sustain growth in the new environment.

Addressing all of a client's advice requirements in as cohesive a manner as possible would mean incorporating investment advice, risk advice, superannuation, debt advice, accountant services and estate planning into one, Neill said.

"The position of niche businesses will be sustainable only for the life of the current operator and will have little transitionary value as they will struggle to offer the breadth of services at a fee level that will be in line with market expectations," Neill said.

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"The relationship strength of the incumbent business owners will ensure some continuity for these businesses in the short term, but we doubt that they will be able to offer longer-term value for any successor."

Furthermore, as practices shift to the new, integrated model, the financial services industry will continue to see increased merger and acquisitions activity, Neill said.

This will result in a decrease in financial planning practice valuations.

"An inevitable trend resulting from the changes, in our view, is a significant downward movement in valuations over the next two years or so, and then plateauing at a lower level than that experienced by comparable businesses over the past five to seven years," Neill added.