Connect Financial Service Brokers chief executive Paul Tynan has issued a strongly-worded statement adding to calls for reform of the AFSL regime to move financial advisers to an individual licensing model, similar to that in operation in the US.
“As the advice sector moves to a ‘true profession’, the only way forward and test for the validity of non-institutional influence is through the eyes of the public – and it is inevitable that individual adviser licensing will be the preferred model,” Mr Tynan wrote.
“Individual AFSLs would immediately lift the public perception of advice, the industry as a whole and be the catalyst for a revolutionary change to the dealer group model.”
However, Mr Tynan suggested that efforts to move to this beneficial licensing model will be held back by vested interests such as the institutionally-owned licensees and even ASIC itself.
“Ironically, the individual adviser AFSL concept will not only be resisted by the institutions because they will lose influence and control of their distribution networks – but also regulators fearing a resultant massive escalation in their workload,” he argued.
The M&A consultant also reiterated his longstanding argument that BOLR payments are an example of a grievous conflict of interest found within the existing licensee model.
In October 2014, ASIC official Joanna Bird told an SMSFA function that individual licensing would have some oversight benefits for the regulator’s monitoring activity, but that the organisation will “deal with the regime that is dished up”.
A parliamentary inquiry in that year examined the issue of individual licensing for financial advisers, but ultimately decided not to recommend reform.
There are more layers in the US licensing model than Australia. Currently if you manage less than USD$100m you do not need a SEC (national) license and can be licensed by your state. Can you imagine the Australian states taking on that responsibility? No thank you, I would rather the existing model but with less institutional control/alignment
We are fifteen years behind the US in most things. Mr Tynan’s comments are valid. We are looking at when not if.
If you want financial planning to be a true profession go and get your own AFSL. If you want to sit here and argue, moan & complain about how you charge, how independent you think you are, how much red tape you face, then stay at your current dealer group along with the other 200 advisers that are the dregs of the advice world and continue to make your fat dealer group head rich whilst taking he takes zero risk. But if you want to make a change go and get your own license. It’s something I did this year, it’s not that hard and certainly not as hard as the fat dealer group head makes it out to be. I’m not saying it’s easy just different. I’m enjoying the lower cost, the less paperwork.. yes having my own AFSL has made me more compliant and more conservative with the clients i deal with and the advice I offer but it’s worth it.
Nice idea, but a pipe dream! It is obvious that ASIC would not like 3000 individual licenced advisers. Its been well known for many years that ASIC, if it had its druthers, would have no more than 50 large licencees. Easier to monitor and easier to scare. Once again, the banks and AMP , who favour “salaried “advisers, will favour status quo, and I cannot see ASIC changing its tune unless it was bribed with a promise of more staff in the Heads-on-Poles section. Pity, as it has merit, but ASIC now have a self-funding model and they would kill individual advisers with fees.
, Everything old is new again !! the whole dealer group AFSL idea was never a smart one, and was all about capturing the hearts and minds of advisers for the purpose of vertical integration.
However Vested interest will ensure this reform wont happen
Nailed it