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Insto acquisitions tipped to calm

Institutional consolidation of financial advice firms is likely to remain at low levels in the near future, according to a financial services lawyer involved in the CBA’s acquisition of Count Financial.

Minter Ellison partner Chris Brown, who acted for Count Financial in the deal struck with the Commonwealth Bank in 2011, has predicted the relatively quiet mergers and acquisitions activity in 2013 will continue, as the market is already “saturated” and “consolidated”.

“[The previous M&A activity has] gone away and it will probably be a long time before it comes back again,” Mr Brown told reporters in Sydney yesterday. “There aren’t that many decent targets left out there basically.”

Mr Brown added his name to the chorus of commentators suggesting a cyclical resurgence of non-bank-owned financial planning firms, suggesting this trend may be aided by foreign investment.

“My sense is that in the coming period – it might be a year or two away – as the banks focus more on their direct and digital offerings to clients we might see a pullback of that FTQ – might see a reformation of non-aligned dealers,” he said. “I suspect that there is some foreign money looking to invest in this space.”

The comments follow the revelation that the Bendigo & Adelaide Bank’s wealth business intends to ramp up its acquisition activity in the financial advice space, following its purchase of Geelong-based Wheeler Financial Services.

The corporate lawyer also said the industry has been hit with a “double whammy” in recent years and has grappled both with unfavourable economic conditions and a “government which appeared intent to perhaps over-regulate retail financial services”.

The FOFA reforms were “as challenging a reform affecting retail wealth services perhaps as ever in this country” and a complex piece of legislation that is “very difficult to interpret”.