The pendulum is swinging again in the financial planning space. After months of concentrating around the big institutions, advisers are starting to go back to boutique AFSLs and smaller independent dealer groups.
The latest Rainmaker Advantage Financial Planning report echoes a trend that I have detected in conversations with financial advisers during the last weeks.
The report shows that there has been a considerable jump in the overall number of adviser groups. Dealer groups went from 650 in June 2008 to more than 800 in June 2013 and a lot of these would be the smaller independent ones.
Also, the proportion of financial planners belonging to non-institutionally owned adviser groups has increased from 19% in June 2010 to an estimated 28% in June 2013.
The numbers are consistent with the fact that the implementation of the Future of Financial Advice (FoFA) legislation and the new government have provided more certainty over the issues that advisers have been worrying about for the last few years.
In the early days of the FoFA debate, a large number of advisers went under the umbrella of the institutionally-owned dealer groups. They were looking for certainty, but also for the scale and the resources necessary to implement what has turned out to be a costly reform.
As advisers get used to operating under FoFA, some have made the choice to not be aligned with either banks or insurers. They have set up their own AFSL licences or have taken their practices to independent dealer groups.
Even though the data suggests a clear trend, it is possible that we are only seeing the beginning of it. Uncertainty around the grandfathering provision remains and a number of advisers are still hesitant to change dealer groups.
The Coalition government has promised to bring more certainty on this issue. When it does, we'll be following closely what looks like yet another big shift in the financial advice space.
