What advisers really want from licensees - the findings are in
Prepared by Charles Smith, MLC Business Growth Manager, NSW
Wealth professionals are under significant pressure as the industry undergoes a major transformation. One key decision all advisers need to make is whether to join an AFS licensee (“Licensee”) or hold their own AFS licence (“Licence”).
Regardless of which path you choose, this decision should start with one critical question: Am I getting all the support I need to grow a successful advice practice?
The core fundamentals of the financial advice industry in Australia are strong. Superannuation is growing and in my experience Australians are demanding financial advice. There may be a huge opportunity to grow your practice in this environment, provided you have taken stock of your business, reviewed the support services you require and implemented effective growth strategies.
It hasn't been an easy ride for financial advisers
But there are plenty of distractions. Replacing commissions with fees, new education requirements, the rising cost of compliance and regulatory changes are heavy on the minds of Australian financial advice practices. It is these issues that are driving critical decisions when it comes to licensing.
Value of services provided by Licensees
Research conducted by Momentum Intelligence on behalf of MLC Licensee Network has identified how important the various service offerings provided by Licensees are to advisers in today's market.
The findings are clear: advisers are looking for a licensee network that can help them build a successful business and navigate the complexities of an increasingly difficult regulatory environment.
The research considered the attitudes of advisers who have their own Licence and those operating under a Licensee. Those who have their own Licence are more likely to specialise in niche advice markets (50.7 per cent compared to 38.2 per cent for advisers who join a Licensee) and are more likely to be planning a succession strategy. Advisers operating their own Licence are also ahead of the pack when it comes to merging advice businesses and acquiring client books.
Advisers under a Licensee more likely to create referral partnerships
Meanwhile, advisers under a Licensee are more likely to be creating referral partnerships and alliances than advisers who hold their own Licence.
Licensees that can facilitate these referral relationships and leverage their extensive networks will be a cornerstone for the next generation of Australian advice practices. As customers increasingly look for holistic advice solutions, financial planning businesses are eager to form alliances with other professionals, particularly accountants and mortgage brokers.
Advisers will require support to run a successful advice practice in future
While Licence holders and those operating under a Licence are implementing different growth strategies, it is becoming increasingly clear that all advisers will require support to run a successful advice practice in the future.
Our research shows that those who operate under a Licensee view regulatory and compliance support as the most important service their Licensee provides, followed closely by the cost of servicing clients and back office support. Advisers who hold their own Licence share a very similar view.
As the industry continues to transform, advisers will need support
As the financial advice industry continues to transform, all advisers will require as much regulatory and compliance support as they can get. Going forward, advisers will need to consider whether they can afford the cost of servicing their own Licence and whether they have developed the skills required to implement effective growth strategies that will drive their business into the future.
This article has been prepared by GWM Adviser Services Limited ABN 96 002071 749 AFSL number 23062 and Godfrey Pembroke Limited ABN 23 002 336 254 AFSL 230690, each of which is a member of the National Australia Bank Limited group of companies. National Australia Bank Limited does not guarantee or otherwise accept any liability in respect of GWM Adviser Services Limited or Godfrey Pembroke Limited or any services provided by them.