WIFS: The perks of being backed by dealer groups

“It’s not me, it’s you”, are the words all now-self-licensed financial planners once said to their Australian Financial Services licence (AFSL) service providers, before running off into the distance to pursue their own businesses. 

Investment Trends data released last year found 20 per cent of planners were self-licensed or under a boutique AFSL, a figure which was up from 17 per cent in 2017 and 15 per cent the year before that. 

The move to self-licensing followed overall sentiment from planners that their service providers weren’t supporting them well enough, or the support they were receiving just hadn’t evolved with their needs. 

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“That’s why across a lot of the industries we look at, financial planners are rating their service providers lower,” said Investment Trends’ research director, Recep Peker. 

Appetite for going solo even proved to be increasing, with another eight per cent of planners citing they intended to pick up their own AFSL in the future. 

Peker said the movement could see the financial services industry start to look like that of the UK, which has seen two-thirds of financial planners move to become self-licensed since their version of the Future of Financial Advice was introduced.

“I don’t know if things are going to go there,” he told Money Management, “but it’s interesting to compare to that market.”

So while the trend in Australia is to take the self-licensing path, Money Management 2018 Women in Financial Services Financial Planner of the Year finalist, Maggie Tagg, says that, on the contrary, dealer groups are, in fact, incredibly supportive. 

Tagg works as a financial planner for Citadel Wealth, which is licensed under Alliance Wealth (a part of the Centrepoint Alliance Group), and she said her eight years as a licensee under the dealer group were extremely positive. 

“They operate in a very consultative manner and are always looking at ways to further enhance the support and services they provide,” she said. “They provide us with dedicated practice development specialists that work with us to improve and grow the business.”

Tagg said Alliance Wealth has a large compliance and governance team, which provides ongoing guidance to ensure Citadel has the most up-to-date information and practices in place.

This means Tagg is constantly training to keep up with ongoing industry updates and uses fully research approved product lists and model portfolios. 

“This enables me to consult with my clients with confidence,” she said.

Elsewhere in this magazine, Infocus Wealth Management’s Darren Steinhardt even suggests that dealer groups are better placed to foot the (extremely high) professional indemnity insurance bill, and it’s small, boutique, or self-licensed planners who cost consumers upwards of $16 million in unpaid determinations. 

Something unique about the dealer group model is the community it tends to provide its advisers, and Tagg said being able to share ideas and issues amongst other advisers at Centrepoint’s conferences and development days is invaluable. 

And regular peer group meetings could prove extremely useful for morale as advisers enter the next stage of their careers and undertake the Financial Adviser Standards and Ethics Authority regime. 

“Having a dedicated team who provide ongoing and proactive support ensures we operate in a compliant and up-to-date manner, which is important for clients and the industry in general,” she said. 

When asked whether working under a dealer group had hindered Citadel in any way, or whether the firm felt constrained by set APLs, Tagg simply said no. 

“I haven’t had a case where I have been unable to provide the appropriate advice to a client due to the dealer or APL,” she said. “Centrepoint are always available to discuss alternatives should the need arise.”  

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