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Jessica Darnbrough & Vivienne Kelly
The third party distribution channel could be set for a major shake up, with one industry stakeholder predicting the emergence of new aggregation groups.
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Liberty Network Services’ managing director Brendan O’Donnell dismissed claims that the industry will see greater consolidation moving forward and instead said the third party channel could see new players come to the market.
Earlier this week, Advantedge’s general manager broker platforms Steve Kane told The Adviser that consolidation was imminent as Australia’s aggregation groups struggle under the increasing market pressures.
“The aggregation space is a very competitive landscape,” Mr Kane said.
“And, the things that are driving competition will also drive consolidation in the industry.”
But Mr O’Donnell dismissed the claims and said the sentiment that consolidation will continue until there are just a few “major players” in the industry was merely “wishful thinking” on the part of Australia’s bigger aggregators.
“Does consolidation benefit the average broker, the individual broker who works out in their local community? I don’t believe so. In fact, the more consolidation there is, the more a broker becomes just merely a number within their distributor,” he said.
“And that then results in less support, less focus, and feeling pretty lonely out there. And as a result, medium sized operators will pick this up. I think there will be a resurgence of mid-sized brokerages in the future.
“Whilst the anticipation is that there will be consolidation down to two or three of four majors, I don’t agree. I think we’re going to see quite a different model emerging because brokers need more support.
According to Mr O’Donnell, brokers will need an aggregator that can support them in terms of technology and legislation.
“I think there’s going to be an emergence of new players. One of those will be Liberty Network Services, but there will also be others – I have no doubt about that,” he said.
“I was CEO of Choice for a number of years, so I’ve been on both sides of the fence. And, if you don’t keep that high-touch model with your brokers, it can become a slippery slope.”
