Chapter title here Australian Financial Advice Landscape

Transcription

1 Chapter title here Australian Financial Advice Landscape May 2018

2 Contents Top 10 Findings 04 Introduction 06 Section 1 National Overview The Australian Consumer The Australian Adviser Adviser Movement Suppliers To The Advice Market 35 Investment Platforms 35 Insurance Platforms 39 Planning Software Providers 43 Research Houses 46 Professional Indemnity Insurers Approved Product Lists Client Analysis Socio-Economic Snapshot Supporting Tables And Analysis Survey And Report Methodology Report Contributors References About Adviser Ratings 100

3 Section 2 Regional Snapshots Australian Capital Territory 1. Australian Capital Territory New South Wales 2. Capital Region 3. Central Coast 4. Coffs-Harbour / Richmond-Tweed 5. Far West and Orana / Central West 6. Hunter Valley (ex Newcastle) 7. Illawarra 8. Mid North Coast 9. New England and North West 10. Newcastle and Lake Macquarie 11. Riverina / Murray 12. Sydney Baulkham Hills and Hawkesbury 13. Sydney City and Inner South 14. Sydney Eastern Suburbs 15. Sydney Inner South West / Inner West 16. Sydney North Sydney and Hornsby 17. Sydney Northern Beaches 17. Sydney Northern Beaches 18. Sydney Outer West & Blue Mountains / South West 19. Sydney Parramatta 20. Sydney Ryde 21. Sydney Sutherland Queensland 22. Brisbane East 23. Brisbane North 24. Brisbane South 25. Brisbane West 26. Brisbane Inner City 27. Cairns 28. Darling Downs Maranoa 29. Gold Coast 30. Ipswich 31. Mackay / Fitzroy (Central Queensland) 32. Moreton Bay North / Moreton Bay South 33. Sunshine Coast 34. Townsville 35. Wide Bay South Australia 36. Adelaide Central and Hills 37. Adelaide North / Adelaide West / Adelaide South 38. Rest of SA Tasmania 39. Hobart 40. Rest of Tasmania Victoria 41. Ballarat 42. Bendigo 43. Geelong 44. Hume 45. Latrobe Gippsland 46. Melbourne Inner 47. Melbourne Inner East 48. Melbourne Inner South 49. Melbourne North East / Melbourne North West 50. Melbourne Outer East 51. Melbourne South East / Mornington Peninsula 52. Melbourne West 53. North West / Warrnambool and South West 54. Shepparton (including Seymour) Western Australia 55. Bunbury / Mandurah 56. Perth Inner 57. Perth North East / Perth North West 58. Perth South East / Perth South West 59. Outback North / Outback South / Wheat Belt

4 06 Chapter Title Here Introduction The financial planning and investment advice industry has undergone significant disruption over the past five years with the implementation of the Future of Financial Advice (FOFA) reforms, the creation of the Financial Adviser Standards and Ethics Authority (FASEA), the launch of the 2018 Royal Commission, the sale of major banking wealth management arms and the consolidation of several major insurers in the life insurance space. Much of this change has been in response to a series of scandals around business practices and poor financial advice. In spite of this, there has been substantial growth in advice under management (~$320 billion or 55% increase) and a 25% increase in financial advisers than there were five years ago. Australia currently ranks 4th globally in terms of assets held in pension / superannuation funds at $2.8 trillion, only behind the USA, UK and Japan. As the population ages and demographics and client needs shift, the role of financial advice will play a more important role than ever. The generational wealth shift, an increase in the SMSF market, the required oversight of ASIC into accountants dispensing financial advice and the exponential growth in the managed accounts space, to name a few, present challenges and opportunities for incumbents and new players. There has been a 43% increase in privately owned licensees in Australia in the last five years and a 36% decrease in institutionally affiliated and owned licensees. Since the onset of FOFA, adviser movements in terms of entries into the industry, exiting from the industry and switching between licensees has increased from 10% of the total adviser community to more than 20% annually. Technology is also having a considerable impact in enabling and disabling incumbents and new players. There are now more than 100 start-ups focused on the superannuation, wealth and life insurance market ranging from auto-investing to claims management to aged care marketplaces to superannuation balancing. In addition, existing technology platforms are reforming their offerings given this threat, as evidenced by the recent sharemarket listing of netwealth in attacking the investment platform space. This report examines the financial advice landscape, with particular emphasis on how the evolution of today s consumer and advice market will impact key players from fund managers to platform providers to software providers to life insurers. It examines potential winners and losers against the backdrop of technological change, industry transformation and changes in ownership structures. In the past 24 months, we have seen the market become more fragmented, presenting a real threat to the way product manufacturers acquire and service both advisers and consumers, but also a real opportunity for these same organisations if they are willing and able to expediently embrace change. This analysis is informed by a survey of 1,103 financial advisers, insights from 20,000+ Australian consumers and analytics from a base of 24,323 advisers and 8,500+ practices in both the private and institutionally licensed markets. It examines consumer, adviser and technology trends at a national level while also segmenting the information into 59 geographical regions across Australia.

5 90 Supporting Tables And Analysis Table 8.6: List of Tables No. Title Page Smart Tools 10 Advice Penetration in SMSF Market 11 Licensee Population by Ownership / Affiliation 13 Top 10 Parents of Licensee by Adviser Population 14 NPS of Big Six Investment Platforms 36 Preferred Investment Platform of Top 25 Licensee Survey Respondents 38 NPS of Big Six Insurance Platforms 40 Preferred Insurance Platforms of Top 25 Licensee Survey Respondents 42 Preferred Planning Software Vendors of Top 25 Licensee Survey Respondents 45 Preferred Research Houses of Top 25 Licensee Survey Respondents 48 Super Fund Industry Summary 50 Top 20 Super Funds in Australia 54 Key Risks For Licensees to Consider in Margin Lending Results 72 Top 100 Licensees By Number of Advisers 83 Top 100 Licensees By Assessed Risk 85 Advice Ecosystem By State 87 Top 10 Advice Parent Companies Historical Growth 89 List of All Tables In Report 90 List of All Charts In Report 91 Key Licensees Profiled Based on Respondent Size 96 Table 8.7: List Of Charts No. Title Page Global Pension Market ($ Trillion) Million Australians Advised (13.9%) 8 Professional Advice Penetration in Pension Funds 9 Use of Professional Advice, By Household Income 9 Advice Penetration in SMSF Market 11 Adviser Types 12 Adviser Population By Licensee Ownership / Affiliation 13 Adviser Experience Distribution 15 Gender Risk - Bannings & Disqualifications vs Industry Representation 16 Top 20 Licensee by Adviser Size and Gender Demographics 17 Adviser Fee Structures 18 Average FUA Per Client 18 Average Annual Fees Paid Per Client 18 Top 20 Licensees By Fee Types 19 % of Advisers With AQF Qualifications 20 Five Year Education Cost for Advisers 20 Annual Ongoing CPD Costs for Advisers 20 Correlation Of Qualifications vs Bannings / Disqualifications 21 Correlation of Licensee Switching vs Bannings / Disqualifications 21 Correlation of Experience vs Bannings / Disqualifications 22 Correlation of Professional Membership vs Bannings / Disqualifications 22 Top 100 Licensees Risk Analysis 23 Decline in Adviser Numbers Top 10 Licensees Most At Risk Of Exits 24 Top 10 Licensees Most At Risk of Exits, By Years Of Experience 24 Exit Risk Outcomes For Major Banks, AMP and IOOF 25 Exit Risk Outcomes For Major Banks, AMP and IOOF, By Years of Experience 25 The 21% Of Practices Willing To Sell In 12 Months By Practice Type 26 32% Of Market FUA To Transfer Owners In Next 5 Years Based On Adviser Exodus 26 New Advisers vs Exiting Advisers 28

6 Supporting Tables And Analysis 91 Table 8.7: List Of Charts No. Title Page Financial Advisers In Industry Switching Between Licensees 29 Net Advisers In Industry Switching Into Licensees 29 Net Advisers Gained (Lost) by Licensee Groups 30 AMP Adviser Movement 31 CBA Adviser Movement 32 NAB Adviser Movement 32 ANZ Adviser Movement 33 WBC Adviser Movement 33 IOOF Adviser Movement 34 Acceleration of Adviser Exits From Major Banks 34 NPS of Major Investment Platforms 36 Penetration of Major Investment Platforms 37 Average Number of Platforms Accessed 37 NPS of Major Insurance Platforms 40 Penetration of Major Insurance Platforms41 NPS of Major Planning Software Vendors 44 Penetration of Major Planning Software Vendors 44 NPS of Major Research Houses 47 Penetration of Major Research Houses 47 PI Insurer Penetration 49 Proportion of Advisers Able To Advise On Super Fund Types 52 APL Investment Offerings 55 Proportion of Death and TPD Insurers on Adviser APLs 57 Average Number of Death and TPD Insurers on Licensee APLs 57 Proportion of Income Protection Life Insurers on Adviser APLs 58 Average Number of Income Protection Insurers on Licensee APLs 58 Proportion of Trauma Insurers on Adviser APLs 59 Average Number of Trauma Insurers on Licensee APLs 59 State Breakdown of Average FUA Per Adviser 61 Top Licensees By Survey Participation and Average FUA Per Adviser 62 State Breakdown of Average Number of Clients Per Adviser 63 Top Licensees By Survey Participation and Average Number of Clients Per Adviser 64 State Breakdown of Average Age of Clients Per Adviser 65 Top Licensees By Survey Participation and Average Age of Clients Per Adviser 66 State Breakdown of Average Client Life Stage 67 Top Licensees By Survey Participation and Average Client Life Stage 68 State Breakdown of Average In-Force Premiums Per Adviser 69 Top Licensees By Survey Participation and Average In-Force Premiums Per Adviser 70 Client Needs vs Adviser Skillsets 71 Margin Lending Adviser Expertise 72 Population and Clients Per Adviser By Region 73 State Population Per Adviser 74 5 Year Population Growth Rate Per State 74 Average Age Per State 75 % of Population Over 55 Per State 75 Average Weekly Income Per State 75 Type of Licensee By Region In ACT 76 Type of Licensee By Region in NSW 77 Type of Licensee By Region in Queensland 78 Type of Licensee By Region in South Australia 79 Type of Licensee By Region in Tasmania 80 Type of Licensee By Region in Victoria 81 Type of Licensee By Region in Western Australia 82 Breakdown of Survey Respondents 92

7 About Adviser Ratings Adviser Ratings is the only independent consumer review and rating system on financial advisers in Australia. Our unique value proposition in being an online marketplace for consumers to connect with and give feedback to advisers has created a robust data, technology and research organisation. We are a team of finance, consumer, data, ratings and technology experts helping to rebuild the financial advice industry with a genuine consumer focus. Our platform supports the financial advice industry by providing intelligence, technology solutions and decision-making support. Core Value Proposition is Our Data Volume of Data Adviser Ratings collects millions of data sets on the 24,000+, 8,000+ practices and 1,700+ licensees. We synthesise this data into usable information for a variety of purposes. Velocity of Data There is a high rate of change in the data sets due to adviser movements and turnover. Adviser Ratings updates its data sets to reflect these changes, on a daily basis. We update our datasets through a combination of data collectors, automated interfaces with partners, surveys and directly from the market participants. Apart from having the greatest volume of data in the market on advice participants, our investment in the data repository is focused on keeping up-to-date, with clear parameters of when certain datasets are to be updated. Each data point is time-stamped to help complement existing databases. Variety of Data Adviser Ratings has unique datasets not previously available to the advice market. Along with our partners, we have a stable of datasets and analytical capabilities that will assist customers in various capacities, including but not limited to risk and compliance, growth, competitor benchmarking and product manufacturing. Veracity of Data Due to adviser movements and turnover, there is a rapid rate of change in the data sets. Adviser Ratings offers the most up-to-date data in market, updated on a daily basis and verified against a variety of external sources. Value of Data AR ensures the data we collect and analyse is useful for businesses in the advice space. This is the strongest part of the Adviser Ratings proposition in an environment awash with meaningless datasets. Nightingale Nightingale is our CRM solution that captures data on adviser, practice and licensee information in the Australian market. Data can be served to clients in various forms, including flat file, SFTP or API secured and hosted by Amazon Web Services. The solution can be customised to any client requirements although typically segmented into five modules: 1. CRM Core 2. CRM Plus 3. Insights 4. Adviser Movements 5. Customer Reviews Laurent Laurent is our data intelligence and cleansing solution. Our technology allows us to dedupe and cleanse multiple files and update against our time-stamped master list. Shewart Shewart has been specifically designed and built for licensees to support their executive, risk, management and marketing teams. The data provides adviser and client insight into a licensee s advisers and benchmarks this information across the industry. It is served in a cloud-hosted environment or through an API. Rubin Rubin is Adviser Ratings white label Find An Adviser platform the design, hosting and data can be served in various forms depending on client s needs. Our Business Connect service is in partnership with the technology platform Practice Exchange. We connect vendors of advice firms with willing buyers. Our Adviser Connect service is a licensee and adviser recruitment solution that allows advisers to confidentially source and seek out licensees that we have vetted to be on our panel.