Two businesses specialising in providing support to small licensees said they were experiencing significant growth due to dealer group dissatisfaction and the introduction of the Future of Financial Advice (FOFA) reforms.
My Dealer Services (MDS) assisted more than 50 businesses in obtaining their own Australian Financial Services Licence (AFSL), with the most dramatic increase in activity recorded in the last six months.
MDS Chairman Don Wiggins said once FOFA is bedded down, the realisation that it is manageable could provide the motivation for financial planners to part from their “often rigid licensees” and provide advice under their own AFSL.
He added there were several reasons for planners leaving their dealer groups, such as a desire for flexibility and independence - and also dissatisfaction with the dealer group, which was reflected in a recent report by CoreData.
“The CoreData findings that 23.3 per cent of advisers expect to switch licensees in the next 12 months, with 14.3 per cent intending to take out their own AFSL, is being borne out right now and the industry can expect this trend to continue into the foreseeable future”, said Wiggins.
Associated Advisory Practices (AAP), which is owned by the Professional Investment Services’ parent company Centrepoint Alliance, provides similar services to boutique dealer groups and has recently recorded its 200th client.
Centrepoint Alliance managing director John De Zwart said AAP, which was established in 2006, had grown as a result of dealer groups wishing to spend less time on compliance issues and back-office operations and more time facing clients.
“Many licensees are struggling with the additional compliance requirements introduced with FOFA and we are finding a lot of principals coming to us for help,” De Zwart said.