Goldman, BlackRock rush to fill wealth-advice void in Australia
As governments everywhere struggle with ageing populations and ballooning deficits, the country’s superannuation system stands out as a model – with a warning
[MELBOURNE] On one of Larry Fink’s frequent trips to Australia, the BlackRock chief sized up a boutique finance firm run by an Olympic swimming champ, a prelude to a A$25 million (S$21.4 million) play to crack open one of the world’s richest retirement systems.
Though the stake was one of Fink’s quieter deals this year, it put BlackRock squarely in the game. Wall Street rivals, such as JPMorgan Chase, Morgan Stanley and Goldman Sachs, are racing to expand across the country, drawn by a paradox few markets can match: enormous household wealth coupled with a chronic shortage of financial advisers.
After more than 30 years of compulsory retirement savings and roaring house-price gains, Australians have become some of the richest people on Earth, with median wealth second only to Luxembourg. Yet when it comes to managing their money, most are flying blind.
Some 2.5 million Australians are set to retire over the next decade, while another 1.5 million are already drawing down about A$600 billion in savings. But barely more than 10 per cent of the country’s adults are receiving any financial advice, according to Adviser Ratings. For those in the dark, the risks are two-fold: outliving their savings or hoarding them out of fear.
“It’s a golden age for the wealth industry in Australia,” said Jason Collins, the Sydney-based head of BlackRock in Australia, which earlier this year bought into ASX-listed Generation Development Group, headed by Olympic gold medalist Grant Hackett, to develop retirement income products.
The collapse in adviser numbers and surge of retirements have created “a real need for financial advice due to the complexities of the system”, said Collins.
Australian fortunes are underpinned by a pension system on track to become the world’s second-largest after the US. After more than 30 years of employer contributions, now capped at 12 per cent of workers’ salaries, total assets are projected to almost double to more than A$8 trillion within the next decade. For global firms looking beyond their home markets, the pull is irresistible.
But this is no easy prize. Outside players face steep compliance costs and, in many cases, tougher standards than in their home markets. Australia’s pension industry is also undergoing a reckoning of its own: the funds that excelled at building wealth are now grappling with the far harder task of turning savings into sustainable income.
On one side sits a A$4.5 trillion pool of workers’ savings that grows by the day; on the other, an advice sector hollowed out by scandal, reform and soaring costs.
After a Royal Commission’s findings in 2019 exposed years of misconduct, including fees charged to dead clients, the nation’s four biggest banks abandoned wealth management. Adviser numbers have since plunged from more than 28,000 to about 15,000, driving fees higher and leaving a widening gap for global players to fill.
The advice industry is “a broken system”, said Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia. “We would like to see more providers in the market getting to know what it is that Australians want, and getting to know our system, so that they can work hand in hand with the superannuation funds.”
Big global names are muscling in. UBS, which spun off its Australian wealth arm a decade ago, has returned via its Credit Suisse merger and is now pushing into Brisbane and Perth. Goldman Sachs is growing its eight-member wealth advisory team for families with A$100 million or more, building on its 2021 openings in Sydney and Melbourne, the unit’s only new Asia-Pacific presence since that time.
“The depth and breadth of sophisticated families is bigger than we had anticipated,” said Chris Kavanagh, executive director at Goldman’s private wealth management business in Australia. “We work in partnership with clients to help them do that due diligence, help them understand the market, help them meet and get access to general partners.”
JPMorgan Asset Management has boosted its wealth distribution staff and forged a partnership with the nation’s largest bank to reach high-net-worth clients. Vanguard is ploughing resources into its own Australian pension fund, Brookfield Asset Management is helping locals expand into private markets, while Morgan Stanley plans to add to its 70-strong advisory team.
“You definitely are seeing much more competitive investment into Australia,” said Rebecca Hill, head of Morgan Stanley’s wealth management unit in Australia, which manages more than A$40 billion. “The dynamics at a macro level are very attractive.”
As governments everywhere struggle with ageing populations and ballooning deficits, Australia’s superannuation system stands out as a model – with a warning. Its experiment in compulsory saving has built immense wealth and shielded the budget from pension shortfalls. But that same success has exposed a new weakness: how to turn savings into a reliable income once work stops.
Paul Schroder, chief executive of AustralianSuper, the country’s largest pension fund, warned that the system has fallen behind.
“It’s too complex and difficult to navigate,” he said in a September speech. Schroder is pushing for broader powers that would allow funds to offer more personalised guidance – something only licensed advisers can currently provide. The government is drafting reforms that would let funds give more tailored guidance and targeted prompts.
Rebuilding trust won’t be easy after the Royal Commission’s revelations shattered confidence and triggered a regulatory crackdown. Cost is another hurdle: the advisers who stayed in the industry are charging more, with fees up 67 per cent over the past five years and rising 18 per cent in 2025 alone, according to Adviser Ratings.
Wall Street’s arrival offers no quick fix. Global players can face higher compliance costs than at home and must meet Australia’s fiduciary standard, a legal requirement to act in clients’ best interests. Similar proposals in the US have been derailed by political and industry backlash.
“There are many offshore players that look at that equation and just think: I’m not sure this is the best opportunity,” said Sarah Abood, chief executive of the Financial Advice Association Australia.
Rising compliance costs have also made it harder to serve smaller investors, says Abood, leaving the industry skewed towards the wealthy. Those deemed “sophisticated”, typically with A$2.5 million in assets or A$250,000 in annual income, face fewer safeguards, meaning that the country’s yawning advice gap is unlikely to be meaningfully fixed anytime soon.
“It’s actually much easier and cheaper to service very wealthy people in Australia,” said Abood.
Australians can also be famously choosy about who they entrust their money to. For 47-year-old Melbourne accountant Nicole Arthur, the human touch mattered just as much as fees when she and her husband started looking for an adviser in 2019. After canvassing friends and family, she chose an adviser at local player Shadforth Financial Group who had also advised her father.
“For us, it was really about finding someone that was going to be a good personal fit,” said Arthur, who estimates her liquid investable assets in the range of A$750,000 to A$1.25 million and owns an investment property on Queensland’s Sunshine Coast.
For offshore firms chasing a foothold with Australia’s mass-affluent investors, an alternative route is through the back door. Earlier this year, Bain Capital, Brookfield Capital Partners and New York’s CC Capital Partners battled for Insignia Financial Ltd., one of the country’s largest wealth managers and a major pension fund operator. CC Capital ultimately won with a A$3.3 billion deal.
The influx of foreign players is already reshaping the industry. JPMorgan Asset Management’s Australian wealth assets have surged fivefold since 2020, according to Andrew Creber, the firm’s head of Australia and New Zealand. And alternative investments, once seen as exotic – private credit, infrastructure, real estate – are rapidly becoming mainstream as retirees seek to diversify.
“Australia is an enormous market in a global context for the wealth of retirement,” said Jeremy Hall, head of international at Brookfield Oaktree Wealth Solutions, which manages about A$89 billion in the country. He says that investors are far more open to alternative assets than a decade ago, when most stuck to equities and bonds.
That appetite carries risk. The corporate watchdog has issued stop orders on several unlisted investment products – including a private credit fund at Brookfield-owned La Trobe Financial – to protect retail investors from unsuitable offerings. For consumer advocates, it’s a warning sign that the wealth boom could tip into something more dangerous.
The global attention is jolting Australia’s homegrown giants into action, just as the system shifts from building savings to helping millions of retirees spend them wisely – without squandering the wealth it worked so hard to accumulate.
AustralianSuper is racing to roll out a retirement-income product aimed at keeping members’ money in-house. General Manager for Retirement Shane Hancock says the annuity-style product will be ready within two years – potentially in time to rival BlackRock’s new offerings with Generation Development Group.
Felipe Araujo, who heads Generation Life, the unit partnering with BlackRock, sees a shift in focus as both necessary and overdue.
“Australia has spent decades focused on accumulation,” said Araujo. “Now comes the harder part – decumulation. There’s a huge opportunity to get it right.” BLOOMBERG
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