The value of specialisation for advice

Speaking on a recent episode of the ifa podcast, Adam Holster, professional services banking executive at NAB, said that as mergers and acquisitions continue within the advice space, it provides an opportunity for practices to refine their service offering to a specific niche while still getting the benefits of a larger firm.

“What I’d say is that the pie is really big,” Mr Holster said.

“At the moment, I think we’ve probably got the advisers that are slowly growing out that pie, slowly but surely, and that is happening via different models.

“We think that it is big enough for super specialisation, the emergence of digital platforms that are able to be white labelled and that sort of thing will further impact the industry as well and we will see some of those businesses that grow by scale.”

He also noted an ownership model that would allow for specialisation of the client-facing business, while the back office is consolidated.

“I think an interesting factor as well might be one model that’s interesting us at the moment where effectively a minority stake is being taken in a number of different businesses and providing that business with not necessarily a one-way, same way, but certainly a lot of scale around how to run the back office,” Mr Holster said.

“But the front office is a very unique and individual brand that is specific to that client segment, that’s specific to the interests and the expertise of those advisers as well.”

The main benefit of scaling, Mr Holster said, is that because advice is such a people-based business, you can cater for the interests of the people within the business to provide advice in a way that works to them and to a clientele that they understand.

“There is one advisory business I know that has a focus on the TV, radio and movie industries, and a lot of their clients come from those industries,” he said.

“In large firms, we see that there are specialisations, there are segmentation around women in really high-paid roles and how they support those women with the accumulation of their wealth and setting themselves up for the future, and just pre-retirees and retirees or Millennials.

“All of those segments, there will be nuances to what sort of advice will resonate the way that it’s provided and also the asset classes and the sort of investment structures that those people will be interested in. So, scale absolutely allows for that specialisation and allowing your people to follow their own path and create their own niche as well.”

To hear more from Adam Holster, tune in here.