Dealer groups offering cash incentives to advisers to join their business should mostly be avoided due to lack of clear value proposition, according to Anne Fuchs, director of Pinnacle Practice.
Fuchs, who had heard of advisers being actively solicited to change dealer groups, said such practices were unsettling for advisers and affected the stability of the overall dealer group landscape.
She said dealer groups that would survive in the new regulatory landscape would be high quality businesses with clear value propositions, "not those who are in the business of paying for funds under management (FUM)".
"If advisers are unhappy with their licensee, their will come to that conclusion in their own time," Fuchs said.
"Encouraging them to shop the business around to the highest bidder does not reflect the professionalism we are all working towards."
Licensees that pay for a so-called ‘FUM transition' were probably working towards becoming an agency-type model, Fuchs added.
"Their authorised representatives facilitate product transactions, rather than provide advice services," she said.
"If licensees are considering going down this route, they really need to think long and hard about their future and where their business sits in the value chain; advisers considering joining them need to think even harder."
The decision on which dealer group was right for an adviser needed to be based on a complete review of a short-list of potential candidates to ensure they were aligned with business needs, Fuchs said.
"It is also worth remembering that like all things in life, advisers will get what they pay for."
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