Smaller licensees may hold the solution for financial advisers seeking more value-for-money when it comes to dealer group fees, according to Pinnacle Practice director Anne Fuchs.
She said the majority of advisers who come to use Pinnacle's dealer group matchmaking service My Dealer Group are in their 30s and 40s and are currently running practices with one of the large licensees.
Many of these financial advisers are on older packages that provide open architecture in terms of Approved Product Lists (APLs) and are paying (in some cases) a premium of $15-$20,000.
Larger dealer groups often defend the cost of offering an open architecture, but Fuchs said it was "like paying for broadband services and getting dial-up".
She argued that there are a number of smaller licensees that have a strong corporate governance culture, a strict quota on the number of advisers they service and clear advice process requirements to manage their compliance risk.
"Importantly, this makes them affordable to younger advisers because they are only getting the absolute essentials," she said.
According to Fuchs, the criticism levelled at boutique groups is quite malicious.
"There are people in the industry tarring all small licensees with one brush; suggesting that because a licensee is small, inexpensive, doesn't have a cast of thousands and yet still offers an open APL, it can't have a good corporate governance and robust levels of compliance," she said.
Small or large, no licensee can ignore the demands being made by the growing segment of professional and highly educated advisers, she added.
"In fact, these are the advisers dealer groups should be recruiting, because they are very well educated, they don't have ingrained bad habits, they're growing revenue businesses and, generally speaking, they are working with other professionals in centres of influence to build their business," Fuchs said.
