In the latest episode of The ifa Show, chief executive of Tribeca Financial Ryan Watson spoke on his decision to leave his previous licensee in 2016 to get his own ASFL.
Watson explained that being self-licensed gives his firm “the freedom and the flexibility to make timely and client-centric decisions”, allowing him to make business decisions based on his own values and what he believes is most important.
He added: “We’re self-employed for a reason. We don’t like bureaucracy and we’re not very corporatised.”
Furthermore, Watson said that operating under his own licence has allowed his firm to operate with greater flexibility and take on a more collaborative approach to the operation of the business.
“We really want to be dynamic and we want to be nimble and it’s really served us well,” he said.
Discussing the wider profession, Watson said that while there has been an increase in smaller advice firms becoming self-licensed, he tends to “think it probably will plateau” as most of those who do want to get their own AFSL, have likely done so at this point, “which might lead to some consolidation”.
The increased number of micro-AFSLs has been an ongoing trend in the profession, as highlighted by Wealth Data’s finding that of the 103 new licensees to commence in the calendar year up to 9 November 2023 who were still operational at the time, just four had more than 10 advisers while 95 had five or fewer advisers.
“People have had an itch that needed to be scratched and they might have three or four advisers that sit under it, but when they look at the overall compliance, or PPR [professional principles and responsibilities], around it, it might become onerous in time and people become stronger together,” he said.
Highlighting this rising trend, Adviser Ratings’ 2024 Advice Landscape Report, revealed that of the 1,863 financial services licensees, 81.5 per cent are privately owned and have between one and 10 advisers.
Furthermore, the report found that more than half (57 per cent) of the new AFSLs in the final quarter of 2023 were applications from single advisers.
Watson also argued that the current licensing model likely makes it harder for the Australian Securities and Investment Commission (ASIC) to monitor behaviour within the advice profession.
“I think with the way that licences are structured at the moment, it makes it harder for ASIC in terms of oversight and reporting and the like, too. It might provide challenges for us as a profession in terms of maybe keeping an eye on some of the behaviour that we need to as well,” he said.
Watson added that he is pleased that advisers are “seeking their own path”, assuming they can continue to deliver what is required of them as advisers and business owners.
“As long as people have the capability to continue to focus on the clients, don’t get caught up in the PPR rigour, and just continue to challenge themselves around the value they provide, and obviously they’re doing it for the right reasons. That’s the key thing,” he said.
To hear more from Ryan Watson, tune in here.
I have a friend who is also an AR in a well-known and large size AFSL but just got his own license. He told me the process took a few hours in paperwork and under $10K in costs with no need to use a lawyer or even an accountant. He had help from another mutual friend who went through the process a few months ago which was his shortcut. ASIC gave him the license in a period of 4 months and no issues with them. His income is under $100K. If this is how easy and low cost it can be, most advisers will move to this model and good luck for ASIC to do their job given they cannot get large AFSLs to supervise their advisers now. How will ASIC cope with 10,000 new AFSL in 5 years’ time?
How does the medical profession cope with Doctors not being licensed by big pharm?
This is why advisers should not be under the AFSL regime. Leave the AFSL for the superfunds employing their version of advisers as a way to oversee them.
I run a licensee and exited an adviser for poor compliance. ASIC gave the adviser his own AFSL without any reference check.
Fully agree with Ryan Watson. I moved from a Bank licensee to a md tier licensee and now am self-licensed. Definitely have less bureaucracy and far better compliance as we deal with the regulation directly- not policies based on the Regs.
How do you know you are doing everything you need to be doing and doing it right ?
It’s not as if ASIC telegraphs what you need to be doing.
I’ll never forget sitting in a compliance session with one of the big 4 years ago and they said “it’s your responsibility to know what you don’t know” and I wanted to push back so hard… this bank lays the rules out without compromise. But they were right. If you want to run your own AFSL you need to have great outsourced compliance support to bounce certain “nuances” off of for clarity, subscribe to all the necessary magazines, podcasts etc and set aside a day or 2 a month to go through and see if any updates or changes are going to impact you. Tedious but necessary.
Most professionally qualified self-employed people are “self-licensed” – think Doctors, Accountants and Lawyers.
I’m guessing, until all advisers are “professionally qualified” we will continue to be treated like second-class used car salespeople.
‘Not for everyone’ . Interesting.
The licensing system is clearly anachronistic.
Accounts don’t have it. Solicitors don’t have it.
Financial advisers ? Yep
Don’t do it guys. More trouble than it’s worth.