Speaking on the latest episode of The ifa Show, director of advice consulting firm Forte Dealer Solutions Steve Prendeville said he has met with more international buyers in the last 12 months than ever before.
Factors like the oligopoly of the big banks, the GFC bubble and reputable compliance systems are some of the main reasons why the Australian advice is considered “ripe for disruption” by international players, Mr Prendeville said.
These international companies are bringing longer-term business strategies, a focus on technology as well as “value propositions that are greater than just capital” – business characteristics that will shatter the current bank oligarchy and shake up the advice sector in the years to come, Mr Prendeville said.
“The Australian market needs to be shaken up – after CommInsure the market is ready for something new and particularly groups that can be trusted,” he said.
Speaking on Japanese investment in the Australian financial advice market, Mr Prendeville said, “They’re bringing something more to the table than just capital, it’s all about longevity, it’s actually a longer-term strategy.”
“The advantage of internationals coming into our marketplace is that there is viable alternatives and it’s not purely dominated, as it currently is, by the banks,” he said.
Mr Prendeville added that international players looking to the Australian advice sector are targeting the independent and non-aligned boutique space.
“It’s the boutique space where they’re having growth of greater than 40-80 per cent year-on-year. I think we’re going to see a lot more mergers and consolidation within the area, which hopefully builds stronger bigger IFA dealerships. Yes, it’s underway but with that migration there’s challenges,” he said.
Listen to the full interview with Mr Prendeville below:
Recently changed software providers. I was looking for something that was going to make me stand out. I was paying about 3 times more than the guy at AMP. The software”s largest customer happened to be AMP so the system was very 1980’s IMO, and I was spending a lot on other programs/ systems leading to double handling. So yes the market is ripe for overseas intervention. But I think the number of IFA”s in Australia is just too low, the discounts offered as part of being a group like AMP or a big bank make it too hard for many to change, (research quoted to me $2,500 to a AMP owned adviser $500) so a lot of this is wishful thinking.
The sooner someone brings a solution that is better than that offered by the dominant player in our industry the better. For all the talk of advancement and changes they have made, it doesnt really seem like that at the coalface.