An analysis of the contributing factors to the growth or decline of the privately-owned financial planning sector

Author Identifier

Darren Pawski

Date of Award


Document Type



Edith Cowan University

Degree Name

Doctor of Philosophy


School of Business and Law

First Supervisor

Robert Powell

Second Supervisor

Anna Golab


Over the past 10 years, there have been many financial scandals in the financial advice industry, which has caused substantial losses for investors. Large wealth institutions controlled by major Australian banks have significantly contributed to investor losses by promoting their products which were not always in the best interests of clients (Steen, 2016). Wealth institutions that manufacture financial products can subsidise the cost of the delivery of financial advice to customers, providing a strengthened competitive position against small privately-owned financial advice providers (North, 2015).

The aim of this study was to explore whether the privately-owned financial planning sector is perceived by advisers to be growing or declining, and the main reasons for that growth or decline. To explore the views, attitudes and motivations of privately-owned financial planning practices, the study undertook a qualitative approach using an exploratory research design.

The research design involved the recruitment of 51 privately-owned financial planning practice owners who were personally interviewed in the place of work, or via phone where on-site interviews were not possible. The interview questions were predominately semi-structured, with nine structured questions also included to enable a statistical analysis to verify the difference in performance between independent and non-independent advisers.

The study found a strong argument that the privately-owned financial planning sector is in decline and will struggle to have any significant growth in the future. Due to the lack of future investment for expansion purposes, the low levels of new entrants, the inability to provide affordable advice, inadequate business planning, limited succession planning and the new regulatory requirements, the sector has significant challenges to overcome to achieve sustained future growth. However, the study found independent privately-owned advisers have a competitive advantage in the industry due to their low numbers, increased public awareness and the lack of adviser transition to full independence.

The study has made a substantial contribution to the literature and the knowledge base of the Australian financial planning industry. The study identified the existing and expected business challenges of small Australian financial planning businesses, including the financial and strategic positioning for future growth. The study discovered the main reasons for the growth and decline of revenue and the direct effect differentiation of service and business planning have on revenue growth. Marketing strategies that can be used to increase clientele were also identified. Furthermore, the study identified a substantial lack of human, managerial, marketing and operational resources in small financial planning businesses. The study found that, while there is a high level of technological adaption, businesses were subject to a high level of key management risk and were not prepared for the potential threat of fintech such as robo-advice. Additionally, owners are reticent to invest in their business, with 93.5% of businesses not having a succession plan.

Finally, the study has addressed the gap in the academic literature about why financial advisers are not transitioning to independent advice providers, as life-insurance commissions remain a necessity.

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