Sole practitioner businesses will struggle: Bombora
One-man-band risk advice practices may find it increasingly difficult to operate as increasing pressure is placed on the life industry, says Bombora Advice head Wayne Handley.
Speaking to Risk Adviser, Mr Handley said he believes sole practitioners operating in the risk insurance space will "struggle” as the environment changes.
Just as accountants and lawyers who used to operate as sole practitioners have moved to a more “corporatised business model”, risk advisers will have to do the same, he said.
“You only have to look and there are not too many one- or two-person accounting or legal practices in the streets of Melbourne or Sydney these days,” Mr Handley said.
“They have moved to a more sophisticated, corporatised model.
“That direction, we believe, is the right way for the future. So they might be able to survive [on their own] but it will only be for a period of time – they won’t prosper,” he said.
Given the challenges presented by the proposed reforms to the life industry, Mr Handley said risk businesses with one or two advisers will “gravitate” towards specialist dealer groups in order to survive.
“I think what you will see happen is a certain amount of consolidation in the industry,” Mr Handley said.
“We will see a gravitation towards professional groups similar to ourselves whose aim is to grow the corporatised model where those advisers can come into a compliant and sophisticated world [and] continue to see clients, while our business will look after those things which they are finding more challenging,” he said.
Mr Handley also said, despite the current environment and regulatory changes, risk specialist dealer groups will be viable in the future.
"[As] long as they change their business model I think they can be very viable," Mr Handley said.
"The reason we use the word specialist is very purposeful, because we believe more so than ever we are moving into an area of specialisation.
"We aim to be the best at what we do – do our job for their clients, on their behalf – and we see that area of specialisation actually growing and becoming more and more of a growth area, and we are currently working with more and more financial planners who are finding risk too difficult," he said.
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