Aggregators must reinvent to remain relevant

Increasing costs to meet licensing, technology advances and broker expectations are putting pressure on the traditional aggregation model, Choice Aggregation Services' CEO Stephen Moore told The Adviser.

"In 2012, groups that continue to reinvent themselves to meet changing needs for brokers will prosper.

“This applies both for large players and those with unique or niche business models,” he said.

Mr Moore said aggregators will not only have to look at new ways of improving their technology, but also new ways of recruiting talent as broker numbers continue to shrink.

“The combination of NCCP and economic conditions is the catalyst for further contraction in broker numbers," he said.

"That said, contraction is not necessarily negative with the majority of brokers exiting being part-time or low producing. Given the appeal of the broker proposition, we expect consumer demand to increase overtime.

"Less brokers with growing client demand is a good outcome for those committed to the industry. The challenge will become recruiting new professionals to meet demand."

Aussie chief executive Stephen Porges agreed and said further industry consolidation and contraction was now inevitable.

"Margins continue to be tight. Smaller aggregators will disappear and a group of larger, more robust businesses will emerge," he told The Adviser.

According to Anita Marshall, managing director of Advanced Finance Solutions, brokers will look to stronger aggregation groups where they know constant support will be available.

"I think a lot of brokers have lost confidence in some of the smaller aggregation groups in light of the recent problems," Ms Marshall said.