The 2017 Dealer Group of Choice Survey, conducted by Momentum Intelligence and Forte Dealer Solutions in partnership with ifa and InvestorDaily, surveyed 268 financial advisers from across the licensing spectrum on a range of AFSL satisfaction and sentiment issues.
The survey, which will be launched at the 17th annual Wraps, Platforms and Masterfunds conference in the Hunter Valley today, 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, while 51.1 per cent said they would choose an independent or non-aligned licensee.
Just 13.39 per cent indicated they would choose an institutional or institutionally-owned licensee, while the remainder said they intend to merge or sell to a third-party irrespective of whether they are an insto or independent.
Interestingly, of those indicating a preference for an independent or non-aligned AFSL, 15.5 per cent said they would choose a legally independent licensee compliant with the Corporations Act definition.
The top motivator in switching licensees was “uncompetitive fees and licensing costs” followed by a desire to become self-licensed. The findings differ from the 2016 survey where “poor culture and work environment” was found to be the chief instigator.
The survey also indicated migration towards these channels would be swift, with 26 per cent looking to switch in the next six months and 41.3 per cent in the next 12 months.
However, of those respondents planning a licensing change, 43.48 per cent said they face some form of structural impediment to leaving, including potential loss of trail commissions or grandfathered revenue and being subject to restrictive licensing agreements or even exit fees or penalties.
Commenting on the findings, Forte Dealer Solutions managing director Steve Prendeville said the trend towards self-licensing poses particular challenges for dealer group networks, who will need to ensure they are demonstrating value.
“The rise of self-licensing threatens all dealers aligned or non-aligned,” Mr Prendeville told ifa. “The only way dealers can compete with this new trend of self- licencing is relevance, competitive pricing and culture or community.”
Editor’s note: The 2017 Dealer Group of Choice survey was completed prior to ASIC’s clarification of section 93A of the Corporations Act and therefore responses relating to the term “non-aligned” may not reflect the regulator’s updated guidance. Momentum Intelligence is a subsidiary of Momentum Media, publisher of ifa.
Self licensing is a very real and feasible option. We were forced to do it in 2008 for a range of reasons including paying too much for receiving too little as well as concern over the culture of the licensee and how it was evolving. After reviewing the universe we becomed self licensed and it worked well for a while but then it was apparent it just replaced problems with other problems….caveat emptor.
However there are real benefits from joining a licensee who is a good fit for your business and your ethics. Besides outsourcing the jobs you shouldnt be doing it also gives you the scale to do things that you could not achieve by yourself.
May I apply for the job. Phillip N. Alexander 0411 777 007. I look forward to receiving your call.
This is a farce, and becoming self-licensed is unachievable for most small advisers. It is extremely difficult to operate an AFSL in the current environment. This isn’t an accident, the system was designed by the input of the product manufacturers with the ideal outcomes: put up a huge barrier to entry, legislate your competitors out of existence, and then go back doing what you did, manufacturer products (if they are subsequently found to be faulty, blame others and then pay a small fine), mislead and deceive, and carry on paying small fines along the way holding everyone hostage. Am I the only stupid idiot who sees what’s happening. What a joke, as if the government agencies can regulate these big institutions, they cannot. the small IFA’s were the last piece of that resistance, but now they too are doomed. Thanks Cop, incompetent to core. Imagine if the head of the SEC in the United States, said, [i]competition is not in our brief[/i].(as reported by IFA). What moron would say that, the SEC says, “protect investors, maintain fair, orderly, and efficient markets”, one way you create efficiency in the markets is by fostering competition especially if the backdrop is an economy that creates natural monopolies
Can anyone suggest a good low cost licensee for a start up FP? We are paying so much money to our licensee and receiving very little service and/or paying for services we don’t need. We’d like to put together a short list and start looking at our options. Any suggestions?
I could suggest a few but there all the same, over promise and under deliver. It costs me about $26K to run my own AFSL and that includes book keeping and accountancy costs that I outsource plus some other costs for my time. I get compliance support, PD days, audits etc. I’m hooking up with another planner and it’s going to cost us about $15K each. Even a Dover costs around $20K. So for starts up you’re probably best sticking and sadly a bank owned AFSL but anything above $250K getting your own AFSL is the go. So my advice would be to either tread water where you are until you’re making enough money to get you’re own AFSL.
There are quite a few out there but don’t think this is the platform to be marketing an AFSL. Probably best to ask your peers and see what they suggest. First point of call maybe to ask some of your trusted BDM’s as they come across Licensee’s all the time.
NSW Complete Financial Services Group; talk to a guy called Bob Bell who is a straight shooter. Google them. I’ve been with them over a year now and everything they say, they do. Minimal services if you don’t want hand-holding or anything you want if you just ask for it. Talking half the fees mentioned on this page.
and all disclosed up front on his web page – no splits just a VERY low flat fee, including top-shelf PI cover, no software unless requested. Independently owned by Bob with zero conflicts – ticks all the boxes a fair-dinkum adviser would want ticked. Can’t recommend him highly enough. He’s not perfect though, who is?! H’es in Forster and I’m in Sydney but it works great.
Bob’s website says “Independent Financial Planning Licensee” yet the FSG first form of payment is commission. How would ASIC view this?