Advice market braces for wave of consolidation as one third consider selling their business
- One third (32%) of advisers are considering selling their business, with rising risks driving large-scale change in the market
- Two in five (38%) advisers believe they would need to sell their business to a larger organisation
- Over a third (35%) believe they need to change their marketing strategy in order to appeal to millennials
Rising risks are driving large-scale change in the financial advice market, with one third (32%) of advisers considering selling their business, according to new research from Canada Life.
Among advisers considering selling their business, four in ten (38%) believe it will be to a larger organisation. The findings reveal that a new wave of consolidation is primed to grip the industry in reaction to the pressures of regulation, economic volatility and cybercrime, among other risks.
Meanwhile, nearly two in five (37%) advisers are considering withdrawing from certain markets, while one in three (28%) are considering retirement.
Figure 1 – The measures advisers are considering taking in response to industry risks
| Selling the business | 32% |
| Retiring | 28% |
| Changing the business model | 18% |
| Expanding | 10% |
| Merging | 7% |
Neil Jones, Tax and Wealth Specialist at Canada Life, said:
“There is a clear signal that advisers are feeling under pressure, which is catalysing change in the industry.
“When they look at the future, advisers who are looking to sell expect to be acquired by a larger organisation, rather than merge with a smaller firm. In short, the industry looks set for a fresh wave of consolidation. The benefits of scale are clear, but it may also be possible for advisers to gain some of those benefits by forming networks and strategic alliances.”
Attracting a new generation of clients
In the hunt for new clients, Canada Life’s research also reveals how advisers are focused on attracting the younger generation.
Over a third (35%) of advisers feel that appealing to millennials would require a change in marketing strategy, particularly one which involves increased use of technology and social media. A third (33%) believe that a more technology-based service – rather than one centred on face-to-face meetings – would appeal to the younger generation.
Almost three in ten (28%) believe that creating an intergenerational strategy around working with existing clients would appeal to millennials, but only one in 20 (5%) think that it would be necessary to change the way they charge for their services.
Figure 2 – The measures advisers would take to attract younger clients
| Change how you market to customers, e.g. increased use of technology, social media | 35% |
| Provide a more technology-based service rather than face-to-face | 33% |
| Create an intergenerational strategy around working with existing clients | 28% |
| Don’t believe I will have to change my strategy | 24% |
| Do not want to attract younger clients | 19% |
| Automate the advice and review process | 14% |
| More transactional approach | 11% |
| Change the way we charge | 5% |
Neil Jones, Tax and Wealth Specialist at Canada Life, said:
“Intriguingly, a quarter of advisers don’t believe they need to change their strategy. This suggests that they have either already changed their strategy to attract younger clients, or that demographic isn’t a priority. Regardless, advisers know that times are changing and creating an intergenerational strategy around existing clients is a great way to capture the next generation.
“In fact, there are some advisers whose yardstick for success is ensuring they capture all the family business – that means dealing with existing clients and their beneficiaries both individually, for their own needs, and collectively. This is hard work, but pays dividends when it comes to building a business for the future.”