Fortnum Financial Group founder Ray Miles and former Financial Services Partners chief executive Geoff Rimmer have launched a consultancy, the Green Zone, to capitalise on growing demand among practice principals to obtain a licence.
In a statement to the press, Mr Rimmer said holding an AFSL is the “path to true independence”, “future professionalism” and the provision of “conflict-free advice”.
“There is growing interest amongst financial planners in establishing their own financial services licence, but many are held back by concerns that there is little information or support available to guide them on the journey,” the statement said.
“There is no doubt that moving AFSLs or establishing one from scratch is a big decision and a huge investment. Last year, ASIC received over 400 applications for new AFSLs but took back just under 200. That’s a lot of very expensive mistakes.”
The comments follow research released by Momentum Intelligence and Forte Dealer Solutions in August that found new evidence for the rise in demand for self-licensing.
The research found that 27.4 per cent of advisers are considering switching licensees.
Of those, 28.89 per cent said they would choose to become self-licensed rather than join an existing dealer group.
Mr Miles remains executive chairman of dealer group Fortnum.
My PI cover is $6,250pa! A far cry from “$30k minimum”. Only those who have more than $100million under advice, or do risky advice and/or hold funds in trust accounts, and/or flog silly products pay high PI. The rest of us minimise ours and our clients’ risks, act transparently and are almost nil risk under PI.
Why a joke. I can’t understand why anyone would NOT be self-licenced in this day and age, when independence is key to integrity and clients are awake to the old model of product flogging. Every suburban practice with 1-4 advisers should (will be in a decade) be self-licenced and only corporatized businesses dealing with corporations and/or the less well-educated will eventually act under a large dealer. I’m a one-man practice and I’ve been self-licenced for over a decade and wouldn’t think of doing it any other way.
Can you tell us how much your PI is Philip? I think Ray Miles has been saying $30K bare minimum.
When we first started out as self licensed our PI was $7.5k. With business growth it has grown to $12k as its linked to revenue and FUM. Not even close to $30k
My PI cover is $10K +/-. costs about $25K to run all up. hope that helps. PI is around 2% usually and starts from $10 to $12K and goes north. Extra if margin lending
Agree 100% Philip. Soon the only advisers left in dealer group world will only be (a) the dregs with poor compliance history and wacky investment schemes..(b) about to exit in the next 2/3 years…(c) start up advisers. If you are not in that category you should be self licensed. I was over paying huge fees to fat dinosaur dealer group heads living in the 80’s with their long lunches and moved to my own AFSL this year. We really need to get this story of being self licensed out because it’s a positive story, unlike us arguing about about degrees and who is more independent.
Cost and availability of PI is the biggest scare factor for self licensing. Very hard to get reliable on this.
I’m part of a small AFSL with less than 10 advisers. I came from a large dealer group with 160 advisers who went belly up just over a year ago. The reason I didn’t get my own licence was, if I am to be quite frank here among friends – I was scared – I didn’t know exactly what to do, I didn’t have enough confidence to know I could manage my own compliance (with all the horror stories of ASIC picking on us!) and felt I would be all alone if I needed help. A lot of these fears were unfounded, no doubt, but they were real for me at the time. I now pay about $12K p.a to my new AFSL and that includes PI (the best!), Kaplan and any help or advice I need along the way. It is not a closed group – the guy who owns it was also an adviser (a very industry-wise and switched on adviser, moreso than I) from my previous large dealer group and is as careful as they come. He does not look to ‘make money’ from us – just cover costs and to help create a group of same-minded advisers to be strong together. The $12K a year seems an entirely reasonable cost compared to about double that which I paid at the big corporate dealer (owned by a big insurer).
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With the idiocy surrounding FOFA and LIF and other things, I’m being discarded by the industry around 2021 when they tell me I need a degree to continue helping clients with income protection, after 33 years! They can go jump as far as I’m concerned as they’ve all lost the plot these idiot academics. They’ve lost their grip on the REAL world we inhabit – the one where clients want straight answers, good value insurance specially crafted for them and honesty in dealings. NOT 72 page SoA’s and pages on how much money we will make from doing their trauma cover! Idiocy! I’ll be out in 2021 and I suppose some new kid will buy my database – good luck to him.
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However, life is good now, I don’t have the AFSL responsibility, I have a very reasonable fee and I am left alone with my clients but there’s someone there to help if I need them. The AFSL is the sort of guy who is minded for the compliance, admin and responsibility owning an AFSL entails. It is not within my interest or personality type. I’d rather spend my time enjoying life and protecting my clients than worrying about others and their compliance failing potentials. Did any of us get into this industry to become administrators? Really? OR . . . did we join up, way back when, to enjoy the possibilities, enjoyment, income and freedom the industry offered? Well, FOFA, LIF, politicians, special interest groups and life company execs all giving us a hard time is enough to worry about these days, I say, so let’s not add the admin burden of being an AFSL to that little lot too! In principal I agree with having my own licence – don’t get me wrong. But, on balance – for me – it would be too much hassle on top of the industry hassles right now. Maybe I’m unique in that I pay so little in fees – possibly – but think about the extra hassle and responsibility one must take on to run your own show. Many won’t want that, ever.
You’re in a good place (other than getting out in ’21 – hope you’re ready to retire by then, otherwise it’s very unfair) and your dealer/mate sounds enlightened and fair. Don’t get too depressed about the new regime – it is an inevitable result of the dodgy advisers we let get to prominence and power before they crashed and burned. Politicians are tarring all with same brush, but that’s what society does. Know a good used car salesman? Yep, me too, but know some dodgy ones – also! And their reputation is set by the dodgy ones. I reckon about 1 in 5 of our industry are either dodgy or ill-informed/undereducated and they set the agenda for us all, because they make the most news, noise and problems for all. Keep doing what you’re doing and teach others before you go. From ’21 you could do part-time work as a mentor/assistant to younger ones coming through and while that may seem like a step down, it removes a lot of the responsibility/angst and you could keep an eye on your clients’ welfare by transferring them to the advisers you mentor. Win/win/win for you, the young adviser who gets some clients and you, who get income for another X years of transition. Hope that helps. Cheers. Philip Carman, Perth
Wise words Philip, thank you.
no conflicts there. They should just get rid of the dealer model altogether, and have dealers become consults/service providers…and compete purely on their product offering only.
I too have been pondering the merits of this model. My concern is that we will actually go backwards as product manufacturers convert their existing dealer infrastructure into service providers and start offering discounts based on the volume of FUM an places… everything old will be new again.
Oh I see – get rich out of the dealer model and then jump on the boutique bandwagon. advsiers are looking to leave the incumbents not pay them for consulting!
Sad to say it but they are just leaches on the financial services industry. They incorrectly make the process out to be very hard and very time consuming (which is why I have a problem with them and called them leaches) and for a tiny fee equivalent to a small car they’ll take this away from you.
this has to be a joke?