Licensees commencing faster than closures as micro-AFSLs flourish

Wealth Data licensees adviser number Principals’ Community

23 October 2023
| By Jasmine Siljic |
image
image
expand image

Advice licensees are opening faster than they are closing, and licensees with less than 20 advisers have grown by over 200 since the start of the year. 

According to figures from Wealth Data, 89 new licensees have opened their doors in 2023 so far. This represents 77 per cent of the total 116 licensees that commenced in 2022.

The number of licensees which have ceased has fallen from 337 in 2022 to just 47 this year so far, demonstrating that new advice licensees are opening at a quicker rate than those shutting their doors. 

Colin Williams, Wealth Data founder, noted that the 2022 results were dominated by 198 losses in the accounting - limited advice (SMSF admin advisers) group. The figure in this space shrunk from 198 to just nine that ceased in 2023. 

Moreover, the figures parallel the growing popularity of smaller AFSLs. Licensee owners who commenced with between zero to less than 20 advisers have risen by 208 this year to date.

This is compared to a notable loss of 261 in larger licensees that began with 100 or more advisers. 

Advice giant Insignia Group has lost 122 advisers in 2023 thus far, followed by AMP Group at 44, and WT Financial Group at 40.

Earlier this year, Wealth Data found some 27.1 per cent of the advice industry work at what it termed as “micro-AFSLs”, or those firms with less than 10 advisers.

“It’s difficult to know exactly ‘where’ financial planning models are heading, let alone if we have reached a destination. All the data tends to suggest that self-licensed models or micro-AFSLs, as we like to refer to them, have definitely shaken up traditional models,” Williams previously said.

The benefits of self-licensing, according to Adviser Ratings, include the flexible business models as well as the ability to have a more diverse offering with each licensee potentially specialising or having a unique value proposition they can mould, and focusing on niche markets or specific client segments that larger licensees might overlook. 

“Smaller entities might offer more flexible business arrangements, access to technology, fee structures, or service models. This could be appealing to advisers who are looking for bespoke arrangements or are dissatisfied with the constraints of larger licensees,” the research house said.

However, Kon Costas, managing director of The Principals’ Community, recently told Money Management that despite the perceived benefits, self-licensing isn’t for everybody.

“Let’s not think that it is. It takes a very well-structured business to run, manage and operate their own licence,” he said. 

Click here to read Money Management's micro-AFSLs feature.
 

Read more about:

AUTHOR

Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Adnan

It is fascinating to see that this year - 2 funds (Mine Super & CFS FirstChoice Employer Super) which failed APRA Perfor...

1 day 9 hours ago
Mitch VB

Thanks for providing us even more work in educating clients on the growth/ defensive splits of all these "top" performer...

1 day 9 hours ago
JohnM

Why would you do that for? It would be a case of the same circus, different clowns....

1 day 15 hours ago

Insignia Financial has unveiled a new operating model and executive team, including a new head of advice, while three senior executives are set to depart the licensee....

1 week 1 day ago

The $280 billion Australian Retirement Trust is the first superannuation fund off the block to report its performance for the 2023-24 financial year....

2 weeks 4 days ago

ASIC has permanently banned a former Western Australia-based financial adviser after he falsified his adviser exam certificate....

1 week 4 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND