About 58% of self-licensed financial advisers say they are more profitable now than two years ago despite increasing compliance costs, according to a survey.
A survey by self-licence network My Dealer Services (MDS) found most principals of self-licenced practices were optimistic about the future.
MDS director, Alex Euvard, said the survey also affirmed industry challenges included the exit of experienced practitioners and a compliance regime that required practices to devote up to 30% of their time and resources to.
Though, he said the rising cost of compliance was “unsustainable in the long run” and needed to be addressed as an industry priority.
According to Euvard, the survey showed owning an Australian Financial Services Licence (AFSL) allowed advisers to be more entrepreneurial and operate better client-centric business models.
However, increases in staff costs and public liability insurance premiums (some as high as 50%) were further expenditures negatively impacting business profitability.
Survey respondents viewed the growth in consumers needing professional advice as another industry issue that would deteriorate further as more advisers exited the sector in anticipation of the academic qualification deadline.
Although a negative on one side, the exodus of advisers was regarded as an opportunity for some, with 42% of advisers confirming they were considering acquiring other businesses’ books to facilitate growth.
Euvard noted that even though many mature age advisers were leaving, the uplift in education standards and qualification requirements was viewed overwhelmingly as a positive for the industry.
The survey also found that 98% of advisers believed technology would play a bigger role in the future to reduce costs, improve operational efficiency, and enhance the client experience.