The financial planning dealer group model has probably passed its use-by date and dealer groups should look to major legal firms for the type of commercial model that will help them move ahead, according to ClearView managing director, Simon Swanson.
Speaking to Money Management, Swanson said that he believed the common dealer group model represented a “false construct” in the context of the changes which had occurred in the financial services industry over the past decade, including the Future of Financial Advice (FoFA) changes, the Life Insurance Framework (LIF) and the Financial Adviser Standards and Ethics Authority (FASEA) regime.
Swanson also pointed to the position that groups such as the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) would likely adopt as code-monitoring bodies under the auspices of the Australian Securities and Investments Commission (ASIC) and FASEA.
He said he personally believed that increasing numbers of planning firms would become self-licensed under the new regime, therefore carrying responsibility for their own professionalism and regulatory interactions.
Swanson said that, in such circumstances, he believed it was likely that the future of dealer groups lay in adopting the same model as major law firms within which individual lawyers were responsible for maintaining their own professional standards and licensing but gained the advantage of working under a large commercial umbrella.
“Dealer groups were a reflection of the industry as it used to be, but I believe they are struggling to remain both relevant and commercially viable in the current environment,” he said.