For advisers planning a change of scenery this year, it’s worth plotting out a roadmap to determine whether aligned or non-aligned groups would best suit their goals, writes Neil Rogan.
There is current industry discussion about the proposed Future of Financial Advice (FOFA) changes and their impact on the ability of advisers to move licensees or contemplate their own AFSL.
According to the latest Money Management 2013 Top Dealer Group Survey, the top 100 dealer groups constitute 16,374 planners, with 72 per cent of those planners working for institutionally aligned groups and 28 per cent with non-aligned groups.
It is expected that with these changes, many advisers will contemplate the non-institutional option – and we are starting to see a trend with some advisers seeking assistance in this area.
There are a number of factors that can influence this decision whilst considering what your goals are both personally and professionally as an adviser in this new environment.
A culture of compliance
Across a number of industries we are seeing a trend to further regulation and compliance – mostly driven by the need to further safeguard consumers. The global financial crisis (GFC) certainly led to a more stringent examination of practices in the financial services industry.
Whether you choose to go with an non-aligned dealer group or to take the challenge of your own Australian Financial Services Licence (AFSL), this new norm of regulation requires you to create a culture of compliance in your business that is not only in the best interest of your clients but will also protect your business in the future.
It is often something that we observe as a key consideration for non-aligned advisers wanting to make the change or those setting up their own licence.
Professional Indemnity (PI) insurance is a key consideration in the ongoing cost and sustainability of those considering their own AFSL or thinking of moving to a non-aligned group.
To address this, we have been investigating options to offer a guaranteed renewability on PI insurance following a number of years of significant price increases as well as the challenging process of being offered new terms only days before the expiry.
Proactively generating renewal notices six weeks before expiry is an option that can be explored for those wanting greater insurance security and the possibility in many instances of guaranteed renewability.
Practice efficiency and profitability
The cost of setting up your own AFSL is another consideration, while having the adequate infrastructure such as technology to provide a competitive service to your clients. Other factors to be considered include resources and skills for responsible management, practice development and business planning assistance.
Leveraging the services of a licensee will give advisers the assistance they need to move to the next step as well as the comfort of having the support of other like-minded business owners.
The old adage of being in business for yourself but not by yourself rings true with many advisers I talk to, citing the camaraderie and network support as a key value driver.
Also, taking advantage of processes and solutions that can effectively “bring back the fun” to the advice industry is something we are seeing an increasing call for as a result of the increasing admin and compliance burden for advisers.
This includes provision of “smart practice” solutions, business health for business planning, outsourcing of paralegal work and the use of technology to create lean and streamlined business processes. All this of course with the key goal of freeing up advisers to do what they do best – helping clients and growing their practice.
Knowing your mind
Finally, having peace of mind in your aspirations as an adviser and as an individual with the many considerations of moving to a non-institutional licensee or applying for your own AFSL are important.
For many financial advisers, the key reason for moving to a boutique AFS licensee is non-alignment – they want to focus on meeting a customer need rather than only advising on products aligned to their dealer group, particularly if there are products in the market that are better suited to their clients.
Others may have strong beliefs in ethical investments but are restrained by their licensees to only advise on products on the APL.
For those contemplating an independently minded change in this new landscape, it is worth creating a roadmap for your goals in the long term and then looking at the “how” and “who” that are most clearly aligned to helping you achieve them.
Neil Rogan is head of distribution and marketing at Centrepoint Alliance.