Speaking as part of a panel at the inaugural IFA Convention in Sydney, Koda Capital chair and former MLC chief executive Steve Tucker said the current shift of advisers towards independence is unlikely to see a reversal.
“This is not the first cycle of IFA-mania we’ve seen, if you go back to the ‘90s IFAs were out and about and it was generally driven by smart business people who realised that they were valuable from a distribution perspective, but it was very product driven,” he said.
“This time I don’t think it’s cyclical, I think its structural, I think its being driven by the client who’s decided certainly in greater numbers today and ever greater numbers from here, that it’ll be [in their] interest to seek independent advice.”
Waterfall Way Associates director Dacian Moses added that changes within the attitudes of both advisers and clients were also influencing the transition.
“I see it as part of the new profession of financial planning that’s emerging from what was previously product distribution, there’s that element as well as a more informed consumer that’s looking for advice over just product that’s a factor here,” he said.
“Those that aspire to that professional status are looking for an environment where they can practice as a professional, and increasingly the place for that is smaller boutique operations”
Linking professionalism with private boutique is a stretch. It is simply a different business model. Boutiques will need to demonstrate a value proposition that goes deeper than motherhood statements and develop governance to hold it all together. Funding will also be a key issue. Private Equity wlll demand a significant premium for their funds which will put financial pressure on the business in 3/4 years time when they expect their payback. The key question will be how clients are better off. Top of the list will be the security of their life savings.
Maybe it also has something to do with institutional dealers like MLC charging big fees and providing very little or no support. When they did provide support it was to little to late. Dinosaurs like Steve Tucker should leave the industry ASAP or dry up on the vine like they expected us to.