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Wealth management in Australia, unlike in other parts of the world, by definition and practice is not a service exclusive to HNWI’s (high net worth individuals). According to the RBA, wealth management is defined to include various forms of funds management (superannuation, managed funds and life insurance) and financial advisory services[1].
[1] https://www.rba.gov.au/publications/bulletin/2016/sep/7.html
The Australian wealth management sector has been under intense scrutiny as of late thanks to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
While not all firms who work in wealth management in Australia offer the types of financial planning and insurance advise that was explicitly singled out for their activities by Commissioner Hayne, the whole sector had some explaining to do.
From fees for no service and the continued billing and payment of commissions for people once they were deceased were only the tip of the iceberg when it comes to issues in the sector.
Like most industries, technology and the way it is used doesn’t just affect the marketing of products and services - such as wealth management – which is delivered and consumed. From moving to mobile & digital delivery, cloud-based services through to personalisation and embracing cyber-security and compliance, the game is changing when it comes to wealth management.
In addition, the generational change in which the baby-boomers required face-to-face consultation and personal service is being replaced by millennials that are tech-savvy and open to less face-to-face interaction, yet these individuals demand greater transparency, accountability and are not afraid to shop around for a better deal.
In the next 10 years, the value of the wealth management industry is expected to reach more than $4 trillion, while currently there are over 25,000 active financial advisors, 583,000 SMSF’s and 249 APRA regulated funds with more than four members[1].
Although Australia is the world’s 12th largest economy, it has a significant financial service and wealth management segment. Not to mention the fourth largest pension system in the world, meaning Australia certainly holds its own when it comes to wealth management.
Wealth management services are undertaken in Australia by a wide number of firms both domestic and foreign with the objective to create, sustain and promote the wealth of their clients. The key activities are financial planning, investment advice and management, cash management solutions, margin lending, estate planning & wealth transfer, insurance and much more.
Wealth management companies in Australia provide advice to so many individuals on some of the most important decisions they will ever make. The wealth management sector in Australia has access to more information about us as individuals, as investors or as part of a larger fund or syndicate than almost anyone.
Managers are trusted to make decisions based on impartial and client-centric outcomes. That is why the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was so important, and why APRA, ASIC and the Australian consumer laws are there to protect the community.
Wealth management in Australia has a great responsibility to its clients, but it’s up to the clients to ensure they go through the due diligence to select a professional manager that suits their personal investment strategy and outcome.
[1] https://brandongaille.com/22-australian-wealth-management-industry-statistics-trends-analysis/
