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The licensee tech conundrum

j plummer intro

julian_plummerIt’s only natural that licensees should focus on compliance, but frustrations can arise if they don’t allow their advisers to boost efficiencies through technology.

Imagine a licensee is considering selecting software for its adviser network to use.

How does it do this?

What are the most important things to consider?

Should the dealer group even be making this decision? Should it be a joint decision between the advisers and the licensee?

While advisers must always put their client’s best interests first, it is in the licensee’s best interests to put their advisers' best interests first.

Licensees should pay close attention to their advisers' feedback when choosing business partners such as software providers.

Advisers will always have a “coal-face” understanding in both the efficiency and efficacy of financial planning software and the impact on their bottom line.

It is interesting to note that advisers and licensees typically have different ideas of what good software is.

Licensees will be inclined to look at planning software from a compliance and group risk management point of view, while advisers will look at it from an advice generation, modelling and ease-of-use point of view. Both viewpoints are very important, but it is essential to get planning software selection right for the advisers because their business depends on it.

Licensees’ compliance teams are cost centres, whose role by definition must be independent of the efficiency needs of the revenue generators.

While the adviser has in effect outsourced their compliance function to the licensee, the adviser does not want compliance dictating business processes within their practices. It is here that the licensee should work closely with their advisers to ensure that compliance shapes itself to the adviser’s business processes rather than dictates them.

Most advisers are acutely aware of the fact the clients rarely walk in their front door because they have a high powered CRM and a rigid workflow system; instead, clients seek them out for the quality of their strategy advice, which is highly dependent on the quality and output of their advice software and statements of advice.

Without discounting the crucial value of compliance, it seems to me that many compliance processes can be unwieldy to use, leading to the adviser ignoring, bypassing or, even worse, “gaming” the process altogether. Process avoidance can give rise to the perverse outcome of the process having the opposite impact on compliance to what was originally intended. Asking advisers for feedback on which workflow system [can be] easily adopted can greatly assist licensees when evaluating software solutions.

It is only natural that the licensee should implement their compliance rules through technology, but frustrations for advisers can arise when the compliance rules are out of sync with the practice’s efforts to increase business productivity through technology.

The ultimate test of the licensee working well with the adviser is the internal take-up of the licensee-approved statement of advice.


The SOA is the currency of the financial advice industry and its success reflects on how well the licensee’s compliance requirements work with their adviser’s business processes. A poorly received licensee SOA generally reflects an organisation where compliance requirements and adviser business processes are in separate silos and don’t know much about each other.

It is worthwhile thinking about licensee software decisions in the context of the cost and revenue trade-off for both the licensee and practice. Let’s take an example of a licensee with two compliance staff working at head office supporting 100 advisers.

Suppose the licensee has to make a decision about whether to either introduce planning software that can either save the compliance staff an hour each (for a total of two hours of cost savings) or planning software that saves each adviser an hour each (for a total of 100 hours costs savings).

The optimal move for the licensee should be to introduce the software that focuses on saving the advisers' time, as this is the move that increases total group productivity. The licensee is probably better off adding more compliance staff if required since the costs savings associated with the advisers' increased productivity outweighs that of any increasing of headcount in the compliance department.

So what’s the upshot of all of this?

If you’re a licensee, start paying close attention to what your advisers tell you about software. Get them involved in as many decisions as possible when it comes to choosing business-to-business partners. Some of the best tenders I have been involved in have been the ones where advisers took the different planning systems out for a road test and were well represented on the judging panel.

Getting them involved in the process saves a lot of frustration down the road. They will soon let you know what works and what doesn’t, and are often very understanding of the licensee’s requirements as long as they are involved in the selection process. They are, after all, the building blocks of any good licensee.


Julian Plummer is managing director of Midwinter Financial Services. Julian's role is to develop, implement and drive the growth of Midwinter's financial planning software across Australia. This includes showcasing Midwinter’s value proposition to licensees, practices, trustees and planners, and working with them to accelerate the growth of their businesses. Julian has held a number of management positions within the financial advice industry, including Head of Quantitative Research for CBA and Financial Wisdom, and has worked with some of the largest multi-manager and superannuation funds in Australia as an asset consultant at Intech Financial Services.