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Advisory industry post regulation: One view

ING consultant David Greenslade is painting a picture of the advisory industry post-regulation as being one that is made up of “nationwide networks” that will be either partially or fully owned or supported by product providers.

Tuesday, April 11th 2006, 6:34AM
He, like some other people in the industry, are signaling the demise of small, one-person financial advisory practices is nigh.

While some will have a place in the industry, his view is that clients will be “looking for the security of known brands.”

Greenslade also says, in a discussion paper Brands, mergers and technology, that once regulation comes in up to 20% of advisers will leave the industry.

He suggests that the supply of advisory businesses on the market will exceed demand and prices will fall – thus suggesting those thinking of exiting should do it sooner rather than later. He also suggests that advisers will “scramble” to join adviser networks. Those who get in first will “secure preferential deals” and those which come later will have to accept “a lower status”.

While many advisers still look at their practices as “personal cashflow machines” they will have to start adopting “a corporate mentality and a willingness to receive a salary and have shares in a large nationwide entity,” Greenslade says.

He says that is starting to happen and will evolve over time.

One trend he notes at the moment is a growing acceptance by advisory firms in the same areas to look at either mergers or co-location.

This is particularly evident in Auckland, Wellington, Christchurch and Hawkes Bay.

Greenslade’s Strategi business is associated with ING and provides the firm with consultancy advice on how to restructure its distribution arrangements to cope with coming legislation of the industry.

An earlier discussion paper urged financial planning groups to consider either moving to a corporate model, a franchise arrangement or some kind of ‘hybrid’ deal.

« News Round UpSovereign takes regulation bull by the horns »

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