Could advice become an $8 billion industry?

Australia's advice industry has the potential to grow from $6.1 billion in revenue to $8.2 billion by 2030, assuming it can scale in proportion to customer demand. 

Per the Advice 2030: The Big Shift report, developed by Deloitte Access Economics in collaboration with Iress, an estimated 486,000 customers will have entered the advice market by 2030. Collectively, these new clients will contribute about $2 billion in additional revenue to the sector over that time. 

Based on the current size of ASIC's register, that works out to around 30 new clients per adviser. It's not quite that simple, though; actually serving this cohort will involve a substantial overhaul of traditional adviser business models as well as accelerated investment in (and more widespread usage of) technology. 

Moreover, the research suggests that shifting demographic profiles, macroeconomic factors and evolving consumer expectations will influence the kind of advice these clients are looking to get – and, therefore, determine which advice businesses reap the benefits of increased customer demand. The seven trends the report identifies are: 

• Skyrocketing retirement demand: advisers can will see an increased demand for SMSF services as well as competitive pressure from super funds providing their own in-house retirement advice 
  
  
• Natural disasters and environmental volatility: given the rising cost of natural disasters and environmental volatility to the Australian economy – calculated at $38 billion per year in 2021 and projected to reach $73 billion by 2060 – it's expected that customers will be looking for more complex advice regarding eligibility for government incentives and rebates, tax concessions and asset risk management strategies
  
  
• The new “Australian dream”: decreased housing affordability has prompted many Australians to look outside real estate for long-term wealth generation
  
  
• Digital delivery of everything: developments in the fintech sector will facilitate cheap mass delivery of financial services, exerting pressure on advisers to articulate the value of a higher-cost, personalised model to customers
  
  
• Intergenerational wealth transfer: as the majority of baby boomers enter retirement, Deloitte predicts an increased demand for advice focusing on future wealth transition 
  
  
• The green wave of future investing: increasingly, advisers will need to cater to clients’ ESG considerations when designing investment strategies and conducting due diligence 
  
  
• Digital assets: the popularity of digital assets and cryptocurrencies, particularly among younger clients, will necessitate specialised advice that addresses volatility, tax implications and cybersecurity 

As suggested by the breadth of topics in this list, meeting all these new clients’ advice needs would require an enormous range of different disciplines and approaches. It would also necessitate a scalable, cost-effective delivery model that either competes with or augments the digital, mass-market services financial institutions and tech platforms will likely provide in the coming years.

Conversely, those practices looking to specialise in particular client profiles or types of advice will have to demonstrate the value added by their deeper knowledge, skills and level of personalisation. 

In either case, advisers should consider how these trends will impact their clients – and their businesses – on the road to 2030. If you’d like to find out what “the big shift” means for your business, start exploring the full report here.