Michael Sauer, who has previously worked as an adviser at Tribeca Financial, Endorphin Wealth, and Verse Wealth, recently announced the launch of Source Wealth, a goals-based financial planning firm.
“It can be daunting starting your own financial planning business after many years where the industry has seen small firms merge or disappear under the cost pressures of running an advice business,” Mr Sauer told ifa.
“However, there are some factors which I believe are going to make it easier once again.”
The most recent Adviser Ratings Australian Financial Advice Landscape report showed that the move away from large advice firms is already underway, with the average number of advisers in a practice falling from 3.1 four years ago to 2.5 in 2022. In addition to this, of the 6,348 advice practices in Australia, 3,866 were single adviser firms – or 61 per cent.
Among the reasons that Mr Sauer believes now is a great time for advisers to go out on their own is that relief from stringent compliance requirements is on the horizon.
“Whilst we don’t know the full detail yet, the Quality of Advice Review is likely to reduce some of the compliance costs which are typically felt more by smaller advice businesses that don’t have the same degree of scale as bigger firms,” he said.
Pointing to the adviser shortage driven by the fallout of the financial services royal commission, Mr Sauer said there is also an opportunity here, along with post-pandemic changes to the way people interact with advisers.
“Firms starting out may be able to meet a gap in the market by charging lower client fees than larger firms do that incur significantly higher fixed costs,” he said.
“In a post-COVID world where video appointments are so common, advisers can start out working primarily from home, which reduces a significant fixed cost from the start.”
While Mr Sauer added that going out on your own is not right for every adviser, particularly in the early going when you are required to “wear additional hats”, the main benefit is that “you can build the advice process exactly how you want it for clients”.
“For example, I am able to start my business utilising technology fully with a digital online client portal and a software tool that allows myself and clients to map out their life goals on a digital timeline, provide fixed fee (rather than asset-based) services and develop a service offering where I can also work with more people in their 30s like myself by matching a fair fee to their service level,” he said.
Source Wealth will officially launch on 24 October and Mr Sauer is licensed through Lifespan Financial Planning, which will provide back-office support, research, compliance, and additional services.
Let’s actually see something change rather than just talk before getting too excited.
Agreed. If the cumbersome “Statements of Advice” reverted back to the simple “Customer Advice Records” of the early 1990s, plus the Annual Fee Renewal Consent Forms were changed to a one-off ongoing service support Consent form (with opt-out), retail advisers could become far more efficient. This is the only realistic way professional support will be provided to the 1 million Australians who are completely orphaned on the platforms.
Too much common sense there mate.