How the financial advice industry is changing

How the financial advice industry is changing

How the financial advice industry is changing 150 150 Glenn Calder

Our industry is changing rapidly right in front of our eyes. Every month the financial advice industry faces new challenges and opportunities. To embrace these, the shape of the sector also needs to rise to the challenge.

One of the most significant issues is that advisor numbers have fallen over the last five years and are expected to fall further. This makes it more challenging for firms to attract great talent who can step up and be leaders in their space. Firms also need to invest more to increase the capability of their team and meet educational standards.

At the same time, the amount of advised money flowing into the industry is increasing. The amount of superannuation in Australia is expected to double over the next decade. Our superannuation industry is world leading, and that in itself presents an incredible opportunity for advisors. More Australians are retiring every day and they’re looking for quality advice.

Technology is also sweeping the world at a rate of knots and it’s changing financial services significantly. It gives firms the ability to access and analyse more data to achieve better results for our clients. But it also raises challenges for smaller firms because their ability to invest in the best technology for their clients is limited.

For years there has been a great divide in our industry – there have been large institutions that dominated the landscape and then thousands of smaller firms. As a result of the Royal Commission, three of the four major banks have announced that they’re pulling out of the industry, and they leave behind a huge gulf. The gulf exists between the majority of Australians who need to be advised and those who are licensed to provide those services.

I think the answer is small firms banding together to create scale. As we’ve seen at Viridian, this scale give us the ability to create our own destiny whilst remaining authentic. Take technology as an example. It’s difficult for small firms to compete because they have to take off-the-shelf outcomes. That means they can’t tailor their processes to suit their clients and business’ needs. With scale, a firm can control its investment in technology. It can identify its parameters for success and develop a model and architecture that achieves more for clients.

Despite all the headwinds that are facing the industry, I believe these changes present a huge opportunity for mid-size firms like Viridian. That’s why we’re embracing these challenges and taking a leadership position. We’re attracting people who want to be part of the change and challenging traditional practices.

Our client’s goals, aspirations and dreams haven’t changed, but the tools and models that we use to help them achieve them are changing at a rapid rate. We’re ready to step up, evolve and adapt so we can bring our clients the best business model for the future. At Viridian, we’re embracing technological and regulatory change, not fighting it.

Glenn Calder is Chief Executive Officer at Viridian Advisory

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