Conaill Keniry, founder of What If Advice and owner of small dealer group Cobalt Advisers, told ifa that while competition among dealer groups could be spurred by the Quality of Advice Review (QAR), advisers are often reluctant to switch due to fear.
“I think advisers have a lot of fear around leaving a licensee,” he said.
“It’s like you’re giving relationship coaching to advisers, but ultimately there’s some key things, like common sense. Is the guidance you’re getting from the licensee inconsistent with what ASIC and RG guides are saying?”
According to Mr Keniry, how dealer groups perceive and act on the government’s response to the QAR’s recommendation regarding statements of advice (SOAs) could determine their popularity among advisers.
Unfortunately, however, Mr Keniry does expect this process to be “super slow”.
As such, he believes advisers need to reassess their relationship with their dealer group even prior to the government’s QAR response.
The key in this assessment, he said, is making sure that the dealer group isn’t affecting the adviser’s business operations.
“If the dealer group is making you do things, it’s actually reducing the quality of your advice,” he said.
“Maybe they’re forcing you into model portfolios that you don’t think are right for the client or it’s taking you two months to get out an SOA because of their compliance processes. That’s actually putting you and your client at risk and making the advice worse”.
These issues, he said, stem from the poor bureaucracy inside the licensee. And although the QAR doesn’t deal with licensees per se, he believes some of its recommendations may push dealer groups to lift their behaviour and their treatment of advisers.
The alternative, Mr Keniry said, is to look at self-licensing, provided the adviser is up to the challenge.
“I really think there is a place in this industry right now for some advisers who are at the forefront and tech [savvy] to do that, start their own dealer group or do four or five advisers and come together to join efforts,” he said.
“Basically, it’s like all things in a marketplace. The market has to say to these dealer groups, ‘What you’re doing is not OK and we need to change.’ Fear has been a common motivator. Big dealer groups will say, ‘You are more safe with us. We have 20 compliance staff’.”
“But it’s not real, so I think that as time goes by, advisers will see that the benefits of some of these bigger dealer groups are not benefits, they’re hindrances.”
To hear more from Mr Keniry, tune into the ifa podcast here.
Having changed licensees after being done over by AMPFP I can assure the author that I would be reluctant to change licensees again. Its a simply concept in theory but it is a very time consuming process. Another factor is that every licensee I spoke to told me how easy they were to do business with and that their compliance was “just right”, this of course isn’t correct but unlike advisers licensees can lie at will.
I couldn’t agree more. I have been with a mid tier dealer group for 4 years, when I started out I asked several times what the exit process involves and was told that it was simple and there was only a $1,000 fee to process info off the system. Shortly after I joined they changed their policy (legally or not) and now say the cost to leave is nearly 60k. IMO all advisors should be self licensed and dealer groups are a thing of the past.
not fear.. either a) the compliance handcuff. b) The kick backs, the discounted platform fees and brainwashing has been too good. c) their dodgy and best served hiding in a large licensee. d) they’re leaving the industry in the next couple of years e) too lazy and or too busy f) all of the above.