Speaking to ifa, Centrepoint national growth manager Ryan Goodfellow said the media narrative around the royal commission into banking, superannuation and financial services may drive more advisers to self-licence.
“[The] royal commission will see more and more businesses considering what their options could be,” he said.
“It’ll be interesting to see what comes out of the media with regards to that, and what impact that has on consumer sentiment and if it drives more AFSL applications because practices don’t want to be associated with the large institutions.”
Mr Goodfellow, who formerly held advice and manager positions within the Westpac group, compared the royal commission to his previous experiences working with larger financial institutions.
“I’ve worked in large institutions before during times when they’ve had a lot of poor publicity and media, and it has impacted directly on practices’ decisions to come across to the group, and that’s because of conversations they’re having with their clients as well,” he said.
Additionally, the rise of managed accounts could drive larger practices to look into self-licensing.
“Larger practices that may have $200-250 million in FUM, they’re starting to think about how they can position themselves or their business as having an in-house investment solution,” Mr Goodfellow said.
“The likes of SMAs, MDAs and all that, and that seems to be a bit of a driver there for these practices to go out and build that, because they can bring in another revenue line into the business.”
The ability to use technology to better serve clients and reduce costs is only being driven by the IFA market. There are huge efficiency and additional accountability benefits on investment options that can be found under the IMA or SMA model. I believe it is time to be clear to consumers that if you go to an institution you will receive their products that they own. The Industry superfunds are clear with this. If people want to seek out a IFA business they then need to feel comfortable that this offering fits with what they are looking for.
So the financial institutions are demonised for vertical integration which will lead to advisers leaving them and setting up their own investment solution via an MDA resulting in their own version of vertical integration and arguably less governance and undoubtedly less financial backing to protect clients. Then we will all be IFAs and there will be no advantage for marketing yourself as an IFA ? Seriously the voices that represent the various vested interest groups should have a good hard look at themselves.
There is little doubt the model will continue to evolve, certainly up to 2024.
Just remember ASIC is considering lifting the licensing costs from around a few hundred dollars to $7,500. Many advisers may just have to reconsider their licensing options sooner. We moved to the self licensed model in late 2016 and I would highly recommend it.