Australian Mortgage and Financial Advisers (AMAFA) chief executive Keith Marshall said conversations with advisers suggest dissatisfaction with traditional licensee arrangements is shaping how many think about their future, particularly those operating under what he describes as outdated models.
AMAFA believes advisers are not necessarily rejecting oversight or accountability by pursuing their own Australian Financial Services Licence (AFSL). Rather, Marshall states many feel the “value equation no longer stacks up”.
“They talk about things like high costs without corresponding high service, rigid systems with limited flexibility, slow decision-making, one-size-fits-all approaches to compliance, and attitudes that continue to treat them as distribution channels rather than partners,” he said.
However, AMAFA warns advisers against romanticising self-licensing as a silver bullet. While frustration with existing arrangements may be understandable, Marshall said that holding an AFSL brings substantial regulatory and commercial responsibilities that are often underestimated.
AMAFA points to research from CoreData that estimated the true cost of self-licensing for solo advice practices can exceed $300,000 a year in some cases, once direct costs and lost client-facing time are factored in.
“The research also suggests some advisers may be underestimating the price of freeing themselves from their licensee,” Marshall said.
“Not only in tangible terms, such as fees, professional indemnity insurance and compliance support, but also in opportunity cost, and the mental load of being a responsible manager as well as an adviser, entrepreneur and business owner.”
According to AMAFA, the debate should not be framed as a binary choice between restrictive licensees and full self-licensing. Marshall argued that “freedom” can be redefined as building a practice that is sustainable, scalable and compliant, without taking on unnecessary operational strain.
“For many advisers, the smartest definition of freedom is not becoming a responsible manager themselves,” he stated.
“It’s choosing a licensee that helps them run their businesses their own way – and spend the highest possible proportion of their week on client-facing work, without putting their licence and livelihood at risk.”
AMAFA said this places pressure on licensees to evolve, delivering adviser-led support through flexible technology choices, paraplanning and administrative assistance, and genuine partnership.
“If the licensee model is to survive, adviser-centricity must be operational, not just aspirational.”
