Dover Financial was one of the fastest growing dealer groups in the country before its closure in June, according to Forte Asset Solutions.
Speaking to ifa, Forte Asset Solutions managing director Steve Prendeville noted that Dover had more than 400 advisers, $4 billion in funds under management and over 10,000 clients before its demise.
He said the closure has had regrettable repercussions across the entire advice industry.
“Advisers within the group have not only had significant disruption to their businesses but also reputational damage,” Mr Prendeville said.
“The 400 or so advisers had precious little time to find an alternate licensee, compounded by alternative licensees being mindful of the ASIC microscope following all adviser movement, their inability to undertake appropriate DD’s in the time permitted, PI Insurers concerns, etc.
“Indeed, presently there are more than 100 advisers yet to find a new home.”
Mr Prendeville said his licensing solutions business dealt with many ex-Dover advisers seeking an alternative dealer in June.
However, he couldn’t represent as many as 40 ex-Dover businesses as they were below its and the industry’s minimum size requirements, recurring revenue of less than $100K but with five or more years of history, all grandfathered revenue, dealer-hopping history, past compliance history, among other factors.
Further, Mr Prendeville said that even those advisers who found a new licensee are having to reassess their choice due to recent developments with the new AFSL.
“All advisers, ex-Dover or otherwise, should now be hypersensitive to their dealer affiliation as their businesses are not only exposed to the lowest common denominator but also the top denominator (i.e. the licensee),” he said.
“You can be guilty by association irrespective of the quality of an adviser’s business/advice and could find yourself a refugee with closed borders.
“It is for these reasons and the reputational cost with the association to the banks and AMP that we are seeing the growing number of practices moving to small-sized dealer groups or self-licensing. The smaller-sized dealer group gives confidence that they have a voice and personal relationships with management and peers.”
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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