The wealth management industry will have more opportunities to tap into the $2.12 trillion personal investment market as platform fees reduce and the availability of lower-cost investment products increases, according to a new report from Rice Warner Actuaries.
As at 30 June 2012, personal investments as a whole – which includes assets held by individuals, either directly or through trust or company arrangements – were up 9.3 per cent over the prior corresponding period. This is expected to grow at a rate of 4.8 per cent per annum in real terms over the next 15 years, the report found.
Rice Warner principal Richard Weatherhead said that when personal bank accounts, term deposits and investments are taken into account, the personal market is larger than total superannuation assets ($1.40 trillion).
"The personal investment market will become increasingly important as Australians seek flexibility of access to their savings and concessional contribution caps, and other tax changes dampen the attractiveness of investing in superannuation," he said.
Although personal savings funds under management with wealth managers sit at around $112 billion, 94.7 per cent of personal investments is held directly by individuals, Rice Warner stated.
Weatherhead said this was set to change, with wrap platforms – including separately managed accounts and model portfolios – expected to increase their market share from 1.6 per cent to 6.6 per cent over the 15 years to 30 June 2027.
According to Rice Warner, the most significant growth within wrap platforms will come from directly-held assets, which is expected to increase from 57 per cent of assets to 74 per cent.
"This reflects the increasing consumer preference for managing investments directly, the increased availability and reduced cost of managed discretionary accounts provided through financial advisers and the growth of exchange-traded funds," the report stated.
