Home / Industry / Gravitation of advisers to the city a function of business models: Wealth Data

Whether an adviser is based in their state's capital city or not has more to do with their chosen business model than anything else, according to new research from Wealth Data.

The financial adviser with the biggest propensity to being based in the city is one that runs an investment advice business model and resides in the ACT, according to new research from Wealth Data.

But whether an adviser lives in their state’s capital city or not has a lot to do with the kind of business they’re running.

Wealth Data recently studied the proportion of advisers that reside in the capital city of their state compared to those that live and work outside it, with Australia’s capital territory showing the largest proportion of city-dwelling providers.

Fifty-eight per cent of ACT advisers are based in Canberra, while 42 per cent are from outside the capital, a result Wealth Data managing director Colin Williams calls “not surprising” given the central demographics of the nation’s capital.

The Northern Territory, which also has a reduced urban sprawl than the major states, was the next most centralised area with an even 50/50 split between capital city and non-capital city-based advisers.

The largest states tended to show more of a spread, the data shows, with NSW and Victoria having 34 per cent and 32 per cent of advisers in the capital city. Somewhat surprisingly, less populous states Queensland and Western Australia had the lowest concentration of capital city advisers, with 29 per cent and 30 per cent respectively.

One theory for this apparent anomaly is that while the bigger states have more thriving urban areas for advisers to ply their profession, Queensland and Western Australia make up for it by servicing a host of well-paid mining families outside the state capital.

Whether an adviser is based in the capital city or not has more to do with their business model than the state they reside, however.

In NSW, for example, 69 per cent of advisers that classify themselves as Investment Advisers are Sydney based, more than any other advice business type. Only 26 per cent of those that call themselves Financial Planners in NSW are based in Sydney.

“That makes some sense,” Wealth Data managing director Colin Williams tells The Inside Adviser. “Most of the investment advice groups like Macquarie, Shaw and Partners and Ord Minnett are city-based.”

According to Williams, the most interesting insight from the data is that a hefty 42 per cent of Super Fund based advisers in NSW are in Sydney.

“That’s the odd one out,” he tells The Inside Adviser. “The bulk of the super fund advisers are based in the city but most of their clients, which are members of funds like Hesta, Hostplus and Australian Super, are from a broader demographic base.

“Many of those advisers might do their work over the phone,” he added. “But in my experience clients usually prefer to meet face-to-face.”