The advice business of the future: scale, through collectives


Chris Fallico

Running an advice business will become increasingly challenging in the future, unless they can gain the necessary advantages of scale, while avoiding the issues identified by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, according to a new whitepaper from Fortnum Private Wealth.

According to the Fortnum whitepaper, The Advice Business of the Future, scale has traditionally been the domain of the institutional model. However, new collective approaches are emerging to ensure profitability and sustainability. These will evolve to create the new operating solutions for the future.

The Advice Business of the Future aims to challenge the way licensees and advisers can work together to achieve better outcomes for the end consumer, and the overall business.

With subsidised advice models coming under increased pressure, Neil Younger, Managing Director and Group CEO of Fortnum, says there needs to be a better way forward.

“Advice collectives will begin to emerge from licensee structures, as they exist today, as the rules of engagement are realigned for participants within those businesses. Advice businesses will have to start adjusting their business model to suit the new world of advice, and it will be a timeline of up to five years for the industry to readjust to the emerging reality”, says Mr Younger.

Chris Fallico, Principal and Financial Adviser of Acadia Wealth Advice, agrees that the success of the collective is dependent on aligning with the right people, philosophy and operating model.

“It can be an attractive proposition for advisers who, in partnership with the right collective, could access significant scale benefits for clients, and increase and unlock business value”, says Mr Fallico. “The new world of advice will need to feature the client front and centre, and businesses will need to learn how to deliver those client-focussed services while finding ways to grow.” As practices seek to extend their business value proposition and product subsidisation is removed from licensee models, businesses need to consider the best way to grow.

The white paper provides some thoughts for discussion. Read the white paper.

You must be logged in to post or view comments.