2022 Year in Review – the only certainty, uncertainty

Mike Taylor

Managing Editor/Publisher, Financial Newswire

20 December 2022

ANALYSIS

2022 proved to be a remarkably stable year for the financial services notwithstanding a change of Government at the May Federal election.

The reason for the stability is that while numerous policy issues were activated during the year, remarkably few of them were concluded, with most, including the Quality of Advice Review, due to be dealt with in the first half of 2023.

• The significant outstanding policy issues for financial advisers include:
• Education standards, including the experienced pathway
• The Compensation Scheme of Last Resort and how it will be funded
• The Life Insurance Framework and the future of commissions
• The suite of proposals examined by the QAR

However, significant change has been wrought within the financial services sector, mostly by way of mergers, acquisitions and separations.

The significant separation of 2022 was the exit of the major life insurers from the decades long membership of the Financial Services Council (FSC) with the establishment of the Council of Australia Life Insurers (CALI), a body which will see much greater alignment with the body representing general insurer, the Insurance Council of Australia (ICA).

Of equal gravity has been the decisions by the boards of the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) to pursue a merger of the two organisations.

As the year comes to a close, the two organisations have moved to the second phase of member consultation including retaining the services of a branding agency with a determining vote scheduled for early February.

For the proposal to succeed, 75% of members of both associations will need to vote in favour.

In the funds management arena the most significant transactions of the year have been the ongoing Perpetual acquisition of Pendal which, in turn, gave rise to a private equity-led bid for Perpetual.

Also significant was the buyout of AMP Capital’s property and infrastructure business to Dexus which, after the earlier sale of the life insurance business, saw AMP trimmed down to being a company with a relatively small bank, an investment platform, a corporate superannuation offering and a wealth management business.

AMP shareholders will be hoping to see signs the AMP financial planning business will do better than break-even before the end of 2023.

Also significant was the merger BT Super with Mercer – something which further removed Westpac from the wealth arena along with holding a superannuation fund product which was deemed to have twice failed the Your Future, Your Super performance test.

The BT Super merger was just one amongst more than a dozen superannuation fund mergers to either be initiated completed in 2022, with the largest being the completion of the merger between Queensland’s QSuper and Sunsuper to create the Australian Retirement Trust (ART) which is now Australia’s second largest industry superannuation fund.

2022 has also seen further consolidation among financial planning licensees with one of the larger transactions being listed group WT Financial Group acquiring risk-focused Synchron in March in a transaction valued at around $8 million.

The Synchron acquisition stood out as a large deal among many negotiations as mid-sized licensees have sought to gain scale in a sector which has been rapidly consolidating as financial advisers have exited.

Remarkably, individual financial planning practices are reporting rarely being busier, while the financial results of their licensees reveal that profitability is still a struggle.