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.
“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.”