Advice businesses will find the future increasingly challenging unless they can gain the necessary advantages of scale while avoiding issues identified by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, a new whitepaper from Fortnum Private Wealth said.
According to Fortnum, scale has traditionally been the domain of the institutional model. However, new collective approaches are emerging to ensure profitability and sustainability, and these will evolve to create the new operating solutions for the future, Fortnum said.
It said the whitepaper, The Advice Business of the Future, aimed to challenge the way licensees and advisers can work together to achieve better outcomes for the end consumer, and the overall business.
With subsidised advice models coming under increased pressure, Fortnum managing director and group CEO, Neil Younger, said there needed to be a better way forward.
“Advice collectives will begin to emerge from licensee structures, as they exist today, as the rules of engagement are realigned for participants within those businesses. Advice businesses will have to start adjusting their business model to suit the new world of advice, and it will be a timeline of up to five years for the industry to readjust to the emerging reality,” Younger said.
Chris Fallico, principal and financial adviser at Acadia Wealth Advice, agreed that the success of the collective was dependent on aligning with the right people, philosophy and operating model.
“It can be an attractive proposition for advisers who, in partnership with the right collective, could access significant scale benefits for clients, and increase and unlock business value. The new world of advice will need to feature the client front and centre, and businesses will need to learn how to deliver those client-focussed services while finding ways to grow,” Fallico said.
