Billy Joel released the chart topping song “We Didn’t Start the Fire” in September 1989, chronicling more than 100 headline events between 1949 and 1989, and partly inspired by some of the dramatic events of his youth, such as the Korean War and the Suez Canal Crisis.

In staccato fashion, the song’s chorus entreats that “we didn’t start the fire”, epitomising one of those really annoying choruses that gets into your head and won’t let go.

That was 1989. What of dramatic events these days.  There would be over 100 dramatic, if not catastrophic, headlines recently on the fiery state of the wealth management and advice industry.  And in stark contrast to Billy Joel’s chorused defence, it’s hard to argue that the wealth management profession didn’t start a few fires of its own.

That latest headlines focus on the demise of the bank-aligned advice channel and the rise of the independent.  One such dramatic headline recently appeared in the normally sedate AFR.  It was titled “Lure of the Independents Sees a Fortress Under Siege”.  The article heralded the threat of advisers defecting away from the banks to establish independent groups (Asset Liftout, Australian Financial Review, Monday September 1, 2014, p 23).

Similar themes were echoed in the IFA’s on-line missives on Tuesday 2nd September, precipitating a barrage of articles, tweets and blogs on the relative merits of aligned v. non-aligned models (an argument best conducted behind closed doors lest the consumer tars us all with the same brush – see T&C Blog 16 July 2014, “Careful What You Wish For”).

T&C is respectfully and bashfully saying we told you so.  On July 2013, we posted a Fortissimo article called “Forget the F-word – It’s the D-words that Matter”.  In that article we foreshadowed the emergence of a D-word called “Disaggregation”.

We coupled the clarion call of disaggregation with a need to embrace additional dramatic events such as the democratisation of content, disintermediation of distribution and the digitalisation of delivery.

A common thread is the effective deployment of new technologies.  Simon Hoyle of Professional Planner picked up the theme in an article penned on August 15, 2013 called “Market Positioning to Dictate Rewards”.  The article explored the notion that emerging technologies, and other market-led solutions, may well enable small licensees to successfully compete in niche markets and to achieve economies similar to institutionally owned licensees.  This is predicated on staying focussed, “sticking to the knitting” and developing service offers that meet the needs of a discerning clientele.

Emerging technology enablers were more recently the topic of discussion at the Financial Standard’s Managed Accounts Forum.

At the Financial Standard Best Practice Forum held in Sydney on the 26th of September, Nadine Moore of SS&C Technologies made the point that the technology behind Managed Discretionary Accounts (MDAs) allows smaller practices and asset managers to act as if they had the scale of the larger institutions.  Overseas experience and the rise of managed accounts in the US and other countries were quoted in evidence.  Also cited in evidence is “Robo-Advice”, a growing phenomenon in the US where often sophisticated on-line advice and portfolio modelling tools are used by advisers to lower the costs of advice delivery and to collaboratively work with clients, including among the “high net worths”.

All well and good that technology acts as an enabler.  Every industry at the moment, from education to retailing to wealth management, is both enlivened and challenged with technology advancements that create opportunities.

But specifically, and most particularly in the case of wealth management, there is a bit more to it than slavish reliance on the next “you-beaut” technology solution.  Similarly, in T&C’s view, technology enabled “roll ups” of advice practices defecting from the institutions and aligned dealer groups are unlikely, of themselves, to extinguish the fires burning in the industry, nor materially stimulate new business from new clients.

The next wave of roll-ups and independent advisers will need to do things differently than previous aggregators – because the world has changed!

Ironically, it may be time to pour some petrol on the current fire in the wealth management industry – not to inflict more burns but to clear the ground for some fundamental changes.  Changes that while recognising emerging technologies, more to the point, are squarely directed at meeting the needs of nascent clients seriously questioning the value of advice, who are spoilt for choice and unlikely to follow blindly in the footsteps of an older generation of advised clients.  Look no further than the rising tide of SMSFs established by younger, aspirational Australians, many of whom approach advice from multiple channels and in different guises – but more on their needs in future blogs.

In the meantime, maybe it’s a case of “burn baby burn”* in order to create the green shoots that mark a return to high rates of organic growth in the advice and wealth management profession.

*The equally annoying chorus line from the 1976 song, Disco Inferno by The Trammps, which also reached No 1 on the charts.