Advice 2030: The Big Shift

The financial advice industry is used to change. Its history in this country is one of constant review and challenge, with shifts in government policy, regulatory attention, consumer confidence and financial markets generally, as well as the shifting nature of financial services business models. The last five years have been particularly seismic in changes to the internal levers of industry, marked by a 43% reduction in the number of advisers, major institutions divesting their advisory arms, significant regulatory change, and a noticeable decline in trust with the industry (24% in 2021). Despite this, at the level of individual businesses, the remaining advisers have stayed the course, seeking efficiencies in their business operations and maintaining familiar models, while doubling down on historic approaches to managing clients, products, and technology. Advisers have responded to changes in training, certification and regulatory expectation but proactivity has not been universal and radical business change has not occurred. This report boldly asserts that this is about to change – and that advisers need to ready themselves. After years of industry disruption from within the sector, we identify that the next, arguably bigger and potentially more profound disruptions are likely to come from seven new external sources driven by shifts in competition, social values, technology, demographics, climate and client priorities.

Coined as “the Big Shift”, these megatrends will impact not only the market overall, but crucially, have serious implications for each individual business. While these megatrends aren’t new for advisers, their maturation suggests that if advisers do nothing in five years’ time, they will be left behind. Alterations in target clientele, product offerings, technological integration, business structures and the way advisers work are all on the horizon. Businesses that fail to be proactive in response to recent changes stemming from the Quality of Advice review and emerging competition from superannuation funds, finfluencers and mobile application solutions, may fall behind more aggressive competitors and struggle to adapt their traditional business models. 

The good news is that after some years of advisers being on the receiving end of industry change, they are now stronger, have greater choice of business model and tools, and possess greater agency in shaping their future ahead of these megatrends. 

Ultimately, this is empowering - and we distil this into four key choices related to customers, business models,  advice specialisation and use of digital technologies. In this report, we map those choices and show that financial advisers who make intentional decisions in these areas are positioned to achieve greater business success and stability, readying themselves for the financial advice market growing to $8.2 billion a year and beyond.