Speaking on a panel at the 18th Annual Wraps, Platforms and Masterfunds Conference in the Hunter Valley, GPS Wealth managing director Grahame Evans said pressure on the industry from the royal commission and other places has made it difficult to run a licensee business using the current model.
“I’m a believer that licensees as they exist today, in five years’ time will cease to exist,” he said.
Mr Evans said dealer groups should instead look to collaborate with regtech providers to automate compliance requirements.
“If we train [AI services] enough over the next five years, they’ll be able to do 96 or 97 per cent, and that way we can manage the systems rather than the whole process,” he said.
“People like ourselves at GPS will need to sharpen the tools and services that we actually provide because our only thing that will keep them there is that we’re going to charge them a fee, but they actually want to utilise the services we offer.”
Another no name no mind pauper
terry come back …..
like you !
I work in reception for a single practice own AFSL planner. He charges a lot and everyone not matter the circumstance ends up in the same SMSF model with the same 5 funds. So, it’s not always the best option. BTW, he’s making a lot of money..as his clients believe him and are uneducated. He would not be able to do this under a big 4 dealer group. He is a nice man though. People love him.
Paula, if “uneducated” let’s see if he makes it through the National Exam which he must complete before the end of 2020 (3-4 hours, 5 mandatory knowledge areas proposed). After that, a degree or post graduate level qualification must be done before the end of 2023. So I would say his days are numbered.
Paula said the clients are uneducated champ, not the planner
The Captain is down…
You seem to know a lot about planning for a receptionist. Maybe you should become an adviser
Good Point Paula, if you worked in a big 4 dealer group I think you’d find there a lot of things you can’t do and that’s ultimately done in order to drive more FUM to the platform. Thankfully we have other advisers that consumers are free to speak to a get a diverse opinion. I work as a receptionist for a NAB planner and everyone she sees ends up in MLC.
You should tip off ASIC and start looking for a new job. Guessing you will find a new job before ASIC does anything.
As a licensee/dealergroup at the smaller end of the spectrum I agree that if they exist in 5 years time they will look a lot different to the past. Interestingly, the market is already responding with many new players taking a different tact to what has traditionally been the case. Having started the business fairly recently we considered the risk to our business of self licensing so have deliberately designed our offering in such a way that should it go that way we will still have a future….just parts will change.
I think it is fair to say that the perception (real or not) from advisers is that dealergoups in the past where providing “fee for no service” but this doesn’t detract from the fact they have been responsible for liability in regards to complaints and the advice.
* tack (“different tact”)
* were (“in the past where”)
* “detract from the fact’ The AFSL provides the advice in all instances advice and is responsible for all complaints regardless of the conduct of the relevant provider. If you run a “licensee/dealergroup” you need to know that.
I gave up,reading most of these replies. The fact is that dealer groups try to provide a solution which is lol things to all men (and women) . The result is a flawed cookie cutter model which provides at best 70% of what a business needs to run itself in the specific way the advisers want.
The only way for this to change is for there to be more freedom to chose what software tools one wants and to pay lower fees to dealer groups to provide the basics, PI, some oversight and a commission clearing house. Most dealer group employees would never contemplate chancing their arm on being self employed, and watch this space, there are too many degree qualified advisers entering the workforce whose greatest ambition is a salary!
“I’m a believer that licensees as they exist today, in five years’ time will cease to exist,” he said.
I think he’s right, but I am not sure that it will actually be a good result.
I suspect that the dealerships will just morph into service providers. With the cost of those services potentially (significantly) discounted for those who toe the party line. The same conflicts will exist to trap those without a sufficient moral compass to resist them.
Financial products are licensed and rightly should remain so. Once adviser education standards are at the professional level, in line with other professions, then there is no need to be licensed. Professional discipline and litigation is the standard as per other professions.
Be careful what you wish for. The end result of the extinction of dealerships will be a massive increase in the need for (and cost of) bespoke software, training, compliance and templating services.
(Aside from that, and I agree with anonymous’s point that “ASIC can’t control what goes on know with a few big licensees to corral, what would it be like with thousands of self-licensed advisers”)
Bespoke software – what does that even mean……???
Bespoke = custom
Are you serious? Or are you just being a smart arse
To get the best out of any financial planing software you need to configure it and set it up to suit your business needs and processes. When your finished it is effectively a bespoke solution of your business.
Anonymous, I’m guessing your your using the out of the box solution…. the digital equivalent of a roll-a-dex and a typewriter.
For large non product aligned/non institutionally owne dealer groups it really is a case of could the last adviser please turn off the lights as they leave. Five years is a bit too soon I’d say more likely 6-10 years. Consolidation, Mergers will be a common theme over the years. If you haven’t worked out WHY then you’re in trouble. A lot of advisers need to have a good hard look at their business model.
The sooner we move to self licensing the better. Does my electrician, plumber, lawyer or doctor need to work under the license of a dealer group?. Yes, there will be issues with policing advisors to be worked out but it’s got to be a better way than paying ridiculous monies to dealer groups for a conference and a few PD days as previously mentioned. Cannot come fast enough I reckon.
This guys seems to make unfounded statements regularly .
I think even if we are all licensed directly with ASIC we will still need aggregators lime mortgage brokers to consolidate our revenue payments and provide other services like SOA templates and technology which is almost impossible to do individually from a resourcing it cost perspective.
I don’t want to individually code an SOA and make sure it meets all requirements. I’m to busy with clients already
Really. If that is the case you should really to everyone a favour and leave the industry.
You want to spend all your time coding SOA’s????
Maybe spend some more time with your clients
The single adviser license is in essence vertical integration. Less AFSL’s is the answer, with each being accountable to providing a level of education, surveillance and added value services to the front line authorized reps it has a relationship with. Single adviser license is to great a risk to our industry and should be removed as an option.
Why would you think single adviser licensing is vertical integration? It may be in some cases, such as those smaller licensees who recommend inhouse SMSFs or SMA’s that generate additional product revenue. But as a general rule the smaller the licensee the less vertical integration.
Single license will be a mini-Dover. Where’s the profit reserve to compensate clients or is the money already taken out to pay for holidays, family, mortgage, kids, etc? Coz you know, we’re all mum and dad’s here.
Isn’t that what our insurance is for?
That’s why comprehensive PI insurance is compulsory (and expensive) for small licensees.
If you take out dodgy assets like goodwill, Dover’s balance sheet and profit and loss was significantly stronger than that of GPS’s new owner, Easton Investments, a listed company.
Who cares about the balance sheet when you get your licence stripped and leave all the advisers up s*it creek without a paddle? Not for the faint hearted is it.
Did you tell people in the audience at that Conference that you are ex AMP Grahame? Also I see no FP qualifications on your LI profile or your profile at the GPS website. So maybe in 5 years or less you can just “disappear”.
How long ago are you talking pal?
Do you think that the type of people who attend such a forum might know him well and know his background within the industry? I mean it’s hardly an event for individual retail investors?
Does he need FP qualifications to do his role? I dont know, obviously you think he does.
Um yes, he sure needs an FP qualifcation if he is going to manage and oversee any Advisers AT THE AFSL. What else is he there to do if not develop and have responsibility for the advice business? Tell war stories? Little wonder we have all these compliance issues at the RC as the “Industry leaders” are either Dinosaurs, have massive Egos or both.
FP qualifications would help him. Otherwise he is just another do as I say not as I do. Next
As a self licensed adviser, I look forward to utilising every conceivable technology and eventually working from a laptop, from home -less staff, less office overhead, better client relationships, higher profitability. The future looks pretty good from where I’m standing.
Why aren’t you doing that now?
…just waiting for my office lease to expire in 2020, then we’re done.
Shame you didnt post your full name so that your existing staff know what lays ahead for them.
The problem with Dealer Groups is that they have no interest in the end client, Mr & Mrs Public. The model is flawed and the only reason it is still alive today is that ASIC is very worried about how it could manage individual licenses. As they rely on Licensees to monitor FPs. I rang ASIC regarding my Licensee and I was told that ASIC will not get involved with a dispute between an Authorised Representative and their Licensee.
Depends what group you’re with I guess. I know mine is.
What was the issue with your licensee?
Well said Grahame. Simply providing an AFSL, a conference and a few PD Days will no longer be a business model.
Peter, if that’s what you think dealer groups do then you are mistaken.
My dealer group provide me technology , a compliance framework , regular audit and feedback, support to meet regulatory commitments plus a million other things. And yes I am licensed by a big four and they provide me a mountain of support to protect t me and my business
You should be mindful to watch commentary you make around the industry that supports you’re business
Anonymous, why do you need a dealer group to protect you? Protect you from what?
Perhaps complaints against vertically integrated selling you do that is in their interests?
You should be mindful to move with the times lest you get left behind.
Protect me from inadvertently not disclosing something under legislation, or recommending a product that has just had a research downgrade. Etc etc etc
Everyone needs to meet regulatory requirements and I would rather someone else provide me that support and infrastructure than do it myself.
Rather than trolling on here looking for people to bite, why don’t you provide constructive and engaging commentary
There is no ” industry” that supports anyone’s planning business in this day and age. Its every dealership for itself and always has been. Until we actually show a united front working for a bank wont save you, as a matter of fact it will work against you, especially when you are sold off which wont be long.
By George, he’s right!
We should all get our own AFSL’s and while were at it we should all separately go out and pay someone to get us new software, templates and workflow threads…. Does any one know someone who can help with that??:roll:
More like 5 months. They’ll be gone when Hayne produces his report from the Royal Commission
Dreaming
as if, as someone else has said, ASIC cant control what goes on know with a few big licensees to corral, what would it be like with thousands of self-licensed advisers? ASIC wont be campaigning for an end to large AFSLs anytime soon.
Yes, that’s an important point and no one seems to be thinking that through. As you point out, if the regulator can’t really handle 5 big players, imagine monitoring hundreds of small ones.
Perhaps. But the smaller ones are less likely to have inhouse product and sales target pressures, which are major drivers of bad advice in the first place.
True but small offices potentially have technical knowledge weakness, solvency, business continuity and PI cap issues in the place of the problems experience in the aligned channels.
Most advisers with these weaknesses get filtered out at the licence application stage. In spite of Ray Miles “easier than a driver’s licence” gag, it is actually pretty strict. And much of the responsibility for adviser standards is effectively being removed from licensees with the advent of FASEA.
All licensed through ASIC directly, pay them $1,000 per month per adviser (25,000 advisers @ $12k per annum = $300m), they are then fully funded to work along side us, responsible for the training, monitoring and supervision of advisers. As it sits right now, ASIC only exist to find fault with what we do. Too many Dealer groups have been creaming off advisers for far too long without providing any real benefit and the model is broken and doesn’t work.
brilliant solution proposed
Exactly, why should we pay dealerships for compliance then have ASIC looking over thier shoulder looking for issues with us funding them too. We are doubling even tripiling up here. ASIC levy, dealership fees, dealership % splits, PI insurance, TPB fees, the list goes on. Pay asic directly, they audit us every 12 months, less risk = less PI premiums. Costs could be reduced dramatically, just pay for planning software to do the research and produce SOAS. No one has any product ties so they all compete for our clients on a level playing field, trust is restored as there is no bias involved, problem solved.
fat dealer heads won’t allow this to happen even though it would improve the professional standing of financial advisers, improve outcomes for clients, result in less red tape and more quality compliant advice that benefits the community
what would fat dealer head groups do then? they are not used to begging, even that requires skills
One things for sure, government institutions are useless at managing money and your ASIC license fee would skyrocket!. Let this happen and watch yourself be priced out of business!