Adviser Ratings’ Musical Chairs Report for Q1 2024, released earlier this month, revealed that 82 per cent of licensees are in a privately owned licensee with fewer than 10 advisers, and the number of advisers under this category of licensee has increased by 17.9 per cent since 2017.
These findings highlight a growing shift towards privately owned licensees within the industry. In an Adviser Ratings post, the founder and managing director of Numerisk, Richard Silberman, said a desire for autonomy and flexibility are contributing to the shift.
“For many, it’s about setting a path forward independently, free of influence from a licensee that may have differing views and future goals,” he explained.
Silberman highlighted the importance of being aware of the added risks and responsibilities that come with self-licensing, including ensuring the business keeps up with industry compliance changes and securing professional indemnity (PI) insurance, among others.
He noted that accessing support services specifically for self-licensed practices can be valuable as they provide education and resources that can assist in navigating the complexities and associated risks of becoming independent.
“While self-licensing isn’t suitable for every business, with the right support and guidance, many thrive under this model. This autonomy allows them to tailor their operations to suit their specific needs and objectives, a flexibility often lacking in larger licensee frameworks,” Silberman said.
He added that an adviser shifting to be self-licensed means less time spent with clients, as they will need to do more to keep up with operational and compliance needs instead.
Speaking on his experience shifting from a large dealer licensee to being privately licensed, Bruce Gorry, managing director and principal adviser of Provident Advisory, said maintaining the quality of service for clients was top of mind during the transition.
“We are degree-qualified, highly professional advisers who want nothing more than to generate great outcomes for our clients over the long term – we needed to ensure our operating environment would continue to provide this opportunity, including the flexibility to be nimble, particularly around the impending changes we are seeing with the QAR,” Gorry said.
“The change was never about saving money, but after undertaking a comprehensive cashflow analysis in planning, it’s a nice feeling to know that the decision stacks up financially.
“The best advice I can provide anyone with is to be completely transparent with your intention, don’t be scared to ask people for help, and be prepared to invest time into the change. We were well prepared, and by and large, the transition was fast and smooth; we couldn’t be happier with the result.”
