Financial planners look to licensee support in 'unprecedented' time: BT
In a time of unprecedented regulatory change and market upheaval facing financial advisers, financial services licensees are going to have to adapt along with advisers to help them through, according to BT Financial Group's general manager of advice, Mark Spiers.
The new environment could also see an increased focus on succession planning as many plan their exit strategy, specifically via 'earn-out' sales where the successor buys into the business in stages as part of a handover, he said.
The four key areas in which financial planners are looking for help from their licensees are:
- help to create more client-facing time;
- help to grow their businesses;
- help to manage their businesses more effectively; and
- help to realise the value in their business and to make sure they eventually receive that value.
Essentially, there is a mind shift going on among advisers where the focus is moving from running a financial planning practice to running a business, and they are looking for help with the changes that go along with that, he said.
In succession planning terms, it is hard to know what cost impacts the Government's Future of Financial Advice reforms will have until a few years down the track when the results can be observed, but one outcome will be a significant increase in the earn-out sales of practices, Spiers said.
Earn outs will be a big factor, because it is a model in which everyone benefits - the buyer can buy in in tranches and the seller can continue to see upside in the business as they phase out their ownership, he said.
However, it is reliant on the principal's people management skills, which have not always been a strong point of financial planning practice owners, Spiers said.
"How do you identify, recruit and retain future partners as a business owner? Some people do it well, and when it's done well they get a higher value for their business because the internal successors can unlock the intrinsic value in a practice. They know what truly sits in and underneath the practice and get that true value," he said.
However, for now the majority of practice sales remain "on the block", Spiers said.
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
