Advisers snub service providers

Advisers are becoming increasingly unsatisfied with their service providers, instead moving to a self-licensed or boutique model, data from Investment Trends shows.

Research director at Investment Trends, Recep Peker, told Money Management that planning profitability was at the lowest it has been since the Future of Financial Advice was introduced in 2013, which indicates that the broader environment is having an adverse effect on planners’ businesses.

Peker said, overall, sentiment across planners is that the service providers they deal with aren’t supporting them well enough, or the support they’re getting hasn’t evolved in line 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,” he said. “There’s a trend towards self-licensing that’s accelerating.”

Peker said 20 per cent of planners now either say they’re self-licensed or under a boutique Australian Financial Services License, which is up from 17 per cent last year and 15 per cent in 2016.

Another eight per cent of planners also say they intend to pick up their own AFSL in the future, which shows a growing appetite for self-licensing, something that Peker said mirrors the situation in the UK.

“In the UK, two thirds of financial planners are self-licensed – I don’t know if things are going to go there, but it’s interesting to compare to that market,” he said.

Peker said the challenge going forward for financial planners and the businesses that support them is to continue to promote the fact that people who get financial advice are better off.

“Ninety-seven per cent of planners’ clients say that their financial adviser had positive impact on them,” he said. “So, clearly, they’re doing a lot good work – you just have to get around the fact that for some there’s a trust issue, but there’s many more who recognise they need advice, especially from financial planners.”

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Poor ASIC. They have beaten the large AFSL's so much that the banks are selling them, and individuals are moving to self licenced. I guess ASIC be faced with a tough choice now. They can turn on the industry funds, or they can turn on a multitude of small practices. The first choice has the advantage that ASIC know how to deal with large AFSL's, while the 2nd choice will be very labour intensive. What do people think?

I much prefer to stay within the ranks of my Bank Aligned licensee or my dealer group of last resort with 400 advisers. I really think these types of relationships whilst it may create more red tape, over regulation and more Government intervention will eventually restore trust& credibility in the industry and help me, my business and my clients. It's worked really well for the professionalism of advisers and our standing in the community. The Royal Commission, FOFA and LIF are a clear examples of the success of that relationship. My clients really love signing four forms to sign off being charged my fees of $10,000 for a $500 co-contribution. I can think of nothing better than filling out forms all day and making clients pay for that. I think this relationship with product manufactures is really positive for us all. I love to study and whilst I've post-poned my study and hiring I'm really looking forward to doing more study for FASEA. I totally disagree with this movement. Hey I've even built in chasing up Opt in renewal forms into my fee schedule it's great. This trend to Individual licensing, advisers forming small pods of like minded minds and lifting professionalism I say....CRAZY.

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