The shift is expected to be driven by a combination of factors, including changes in fees, an increased focus on private assets, and the inability of some managers to adapt to changing conditions. The impact of these changes on the New Zealand financial industry is a topic of considerable interest and concern.

Clayton Coplestone, director of Heathcote Investment Partners, provides some insight into this issue. He suggests that to understand the implications of these changes, it is necessary to differentiate between various aspects of the value chain and to remain mindful of the relative uniqueness of the New Zealand industry.

"There is currently in excess of 129,000 various managed funds available for consumers to invest, with the vast majority of these either sub-scale and/or failing to add value," says Coplestone. "This is not an active/passive debate, more so that the majority of investment solutions have a limited point of differentiation whereby price and/or brand becomes the primary differentiator. For those Asset Managers who continue to operate in this ‘no man's land’ the future of consolidation is imminent."

The situation is different for wealth advisors. Coplestone says, “Large aggregators have long since realised that it is difficult to 'McDonalise' what is essentially a relationship-centric industry. Consumers are willing to pay a relationship premium in exchange for a bespoke financial solution. Some New Zealand groups are attempting to develop vertically-aligned businesses by purchasing advisory businesses, but these moves are more about shoring up their distribution structures than adding any meaningful value.”

He says the biggest single challenge facing the NZ wealth advisory industry is simply demographics. "The combination of an ageing workforce and low new participation rates means that there just aren’t enough dispensers of advice to satisfy the growing levels of consumer demand."

When asked about potential solutions to these challenges, Coplestone says, "Sadly the solutions are not industrialising the value chain, nor embracing robo-advice, as consumers are willing to pay a premium for a bespoke solution. The only true solution is for the NZ financial services industry to attract and retain younger industry participants, who are able to utilise technology to make the delivery of their financial services more efficient, whilst using their time to help provide older advisors with a succession plan. In reality, this takes at least three years to complete, and is hampered by industry inertia, regulatory hurdles, and competing industries."

As the wave of changes continues, it is clear the New Zealand financial industry will need to adapt and evolve. The road ahead may be challenging, but with careful navigation and a willingness to embrace new approaches, there is potential for a bright future.