The financial planning industry is likely to experience increased consolidation in the next few years, prompted not only by the Future of Financial Advice (FOFA) reforms, but also by competition from non-planning firms, according to CoreData.

"Competition in the sector has become more intense as accountants, stockbrokers and super funds seek to enter the planning industry and could necessitate consolidation amongst the smaller practices to keep costs low and margins wide, or partnership-type models that leverage the best of both professions," the research firm said in a white paper, titled "Planning for Success".

But the FOFA reforms were also likely to spark more consolidation, in part because many experienced advisers would exit the industry and the loss of skills and experience would likely force many practices to merge or acquire to survive, CoreData said.

"There is . a growing sense of realisation among some advisers that smaller practices may not be able to survive in light of the FOFA reforms," it said.

"The licensee end of the financial planning industry has already reacted to this with a raft of mergers and acquisitions, emphasising the systemic pressure to attain scale rapidly."

Consolidation is also likely to take place at the manufacturers' level, the dealer group level and the practice level.

At the practice level, acquisitions were likely to be horizontal and involve mergers between financial planning firms and non-planning businesses, Coredata said.