The uncertainty that has plagued Australia’s economic landscape almost feels normal now. Conflict in the Middle East, global energy shocks and geo-political re-alignment are all part and parcel of operating in the Australian economy, and financial advisers are some of the best placed to help people navigate this uncertainty.
However, advice has been far from a stable sector in the past decade itself, and recent Natixis Investment Managers research has set out several challenges and disruptions the profession should expect going forward.
The usual suspects are there: the increasing presence of artificial intelligence as well as the increasing digitalisation of the advice sector’s competition.
Another key disruption that Natixis cited is the ever-ageing workforce, and the challenges this presents in terms of succession. The research found only 42 per cent of advisers aged 55 and over have a documented succession plan, while 28 per cent say they are struggling to hire younger advisers.
Despite this, only 26 per cent of Australian advisers under the age of 55 have a documented succession plan in place to take over a retiring adviser’s business, compared with 50 per cent globally.
However, Natixis said this transition does present an opportunity.
“88 per cent of advisers are viewing the wave of retirements as a chance to grow assets. Realising that opportunity, however, will depend on effective succession planning, talent development and continuity for clients during periods of change,” the company said.
Another challenge addressed by Natixis was keeping clients invested in uncertain times, highlighting that retaining existing assets during a period of rapid change is a central disruption.
The research found that in Australia, 65 per cent of advisers report clients are holding more cash in response to uncertainty, reflecting heightened sensitivity to geopolitical risks and market volatility.
“This environment is also driving behavioural missteps: 77 per cent say investors are reacting emotionally to headlines, 65 per cent say clients are trying to time the market or chase returns, and 47 per cent point to unrealistic return expectations,” Natixis said.
“With 84 per cent of advisers identifying geopolitical uncertainty as a major risk, keeping clients invested through periods of volatility is becoming a critical lever for maintaining and growing assets under management.”
Danny King, Natixis head of Australia and New Zealand said that the profession is operating in a period of rapid change especially in regard to regulation, evolving client expectations and demographic shifts.
“What is clear is that disruption is not a threat to the value advisers provide, but a catalyst for evolution,” King said.
“In today’s uncertain economic environment, working with an adviser is one of the best ways Australians can stay on track to achieve their financial goals. To succeed in the years ahead, advisers will need to show the value they add beyond asset allocation,” he added.
“More than ever, their ability to guide clients through volatility and keep them focused on long-term outcomes will be critical.”
