The Rise of Multi-Partner Super Firms: The Future of Financial Advice
The financial advice landscape is evolving rapidly, with multi-partner "super firms" emerging as the dominant business model of the future, according to Encore Advisory Group director Tom Reddacliff. This shift represents a significant departure from the traditionally prevalent single-owner practices that have characterized the industry.
Current Market Dynamics
Reddacliff identifies two distinct types of advice businesses operating in today's market. The first category comprises businesses experiencing robust growth with abundant client opportunities. "Managing growth" challenges in these firms are what Reddacliff describes as "the good problems to have."
However, these growing practices face their own set of challenges. Reddacliff identifies three critical areas requiring attention:
Human resources capabilities
Consistency of processes
Strength of balance sheets
The Emergence of Super Firms
"The ultimate business model [what we are dealing with now] is the emergence of privately owned, big solid multi-partnered scalable firms and that is the business model of the future," Reddacliff asserts.
These super firms typically feature:
Solid balance sheets
Multiple partners
Scalable operations
Interest in acquiring other businesses
The Challenge for Single Practices
While single-adviser practices continue to exist, they face increasing operational challenges. These smaller businesses often struggle with rising costs and need to focus intensively on operational efficiency and cost management. According to Reddacliff, these practices need to operate "really sufficiently" and focus on "managing your costs really well."
Looking Ahead
The trend toward larger, multi-partner firms reflects the maturing of the financial planning industry. As the sector continues to evolve, the super firm model appears poised to become increasingly dominant.
This article draws insights from "Rise of the multi-partner 'super firm'" which appeared in Professional Planner, February 2024.
Read the full article: Rise of the multi-partner ‘super firm’
https://www.professionalplanner.com.au/2024/02/rise-of-the-multi-partner-super-firm/
