There is no clear definition of wealth management. For the purposes of this Inquiry, wealth management will be taken to include financial advice services and funds management. Superannuation is the largest component of the wealth management sector.
The wealth management sector has undergone considerable consolidation since the Wallis Inquiry.
- The most successful platforms have been getting larger relative to their competitors. The five largest platform providers now hold almost 80 per cent of primary planner relationships.49
- Financial planners have consolidated or moved in-house to work directly for wealth management institutions.
- Vertical integration is increasing, with the major banks and AMP at the forefront of this trend, combining advice, platforms and fund management into single businesses. Other wealth managers, including Macquarie Group, IOOF and Perpetual, have replicated this strategy to varying degrees.
Competition in the wealth management sector appears to be focused more on securing distribution channels and improving product features, rather than reducing fees. The Superannuation chapter explores competition issues in relation to superannuation products and the recent MySuper reforms. The Consumer outcomes chapter discusses the recent Future of Financial Advice (FOFA) reforms; however, it is too early to assess the effect of these reforms on competition.
The Inquiry welcomes stakeholder views on competition issues in the broader wealth management sector.
49 Investment Trends 2014, Planner Technology Report, May. Note: Based on a survey of 1,038 financial planners.