Despite the expectation of increasing consolidation within the financial planning industry, the number of dealer groups in Australia is likely to go up, according to Premium Wealth Management.
"A lot of member principals of larger firms that have simply outgrown their dealer group are looking to get their own licence, which counteracts some of that consolidation," Premium chief executive Chris Saunders told InvestorDaily.
"I haven't seen any deterioration in dealer group numbers. If anything, we will probably see that increase," Saunders said.
Paragem managing director Ian Knox estimated that there are currently about 50 applications from financial planning groups for an Australian Financial Services Licence (AFSL) outstanding.
"There are all sorts of reasons to apply for an AFSL, but the most typical one is that someone outgrows their current environment," he confirms.
But Knox also said consolidation in the industry often goes hand-in-hand with an increase in the number of dealer groups.
"Whenever we have consolidation occurring, and a dealer with a number of practices is taken over by someone else, typically that is by an institution. Immediately when that happens a number of practices seek to leave," Knox said.
"Effectively, you get consolidation of a number of practices into one licence and the spin-out effect of that is disintermediation, probably by practices that do not wish to be owned by an institution," he said.
