A research house is predicting life insurance companies will have to expand the numbers of specialist advisers they use to meet the demand for scaled advice.

In its latest report on the financial services industry, Ibisworld says only 2% of the estimated 17,000 advisers provide scaled advice.

“This is expected to rise to 10%-15% by 2016/17,” the report says. “This is because holistic advice is expected to cost far more than scaled advice under the new fee-for-service framework.”

The researcher argues many individuals will not be able to afford a fee for advice and will not want to pay for extra services such as investment advice, which they may not need.

“Scaled advice can be more efficiently provided as an adviser needs only be trained in specific products, and can also more accurately meet the needs of the individual in regards to a particular area of their finances,” the Ibisworld report says.

“Financial institutions such as insurance specialists are expected to expand adviser numbers to provide advice to clients pertaining to a specific area.

“Due to the relatively low cost of scaled advice, demand is expected to grow when the new fee structure is implemented.”

As the financial services market changes to meet the demands of new regulations, the researcher is expecting competition for clients to intensify as there will be a short-term decline in people seeking advice.

There will also be increased competition from new players – such as accountants providing advice to self-managed super fund trustees – adding pressure on advisers looking for new clients.

“This period of adjustment will be hard for small and mid-size businesses that do not have the resources to cover potential losses incurred while the business adjusts,” Ibisworld says.