In the next few years, significant changes can be expected in the financial planning profession. Norman Chan, investment director of Altruist Financial Group Limited says, "There is no doubt that the business of financial planning is still evolving. The current economic structure, demographic distribution and ageing population are key factors that will benefit the industry and speed up development. We anticipate major changes."
Mr Chan predicts that, within the next three years, two things will happen: independent financial advisers (IFAs) will focus more on customer service as they fight to increase market share, and companies will continue to explore new areas of business. "By studying the development of more mature markets in Europe and the USA, we can expect that the share of the financial planning market held by banks, now around 70 percent in Hong Kong, will decrease. As IFAs become more established, they will play a larger role," he says.
As the industry becomes more regulated, some IFAs may find it hard to cope with the strict system of supervision. According to Mr Chan, "The amount of fixed capital assets necessary for business expansion will become higher. Sizeable companies will be able to take advantage of this, but the smaller ones are likely to be taken over, or will go out of business. Specialist firms with only two or three advisers, which target high net worth clients, may still find a way to survive."
Mr Chan points out that, to succeed, IFAs will need to increase their levels of professional expertise. "The training programmes currently on offer meet market demand," he says. "However, the quality of those programmes varies and, at the end of the day, we have to recognise that the number of people working as financial planners will grow. All of them will need a consistently high level of professional training."