While there is increasing interest amongst financial planners for establishing their own Australian financial services licence (AFSL), many have concerns about the lack of support and information throughout the process, according to consulting firm GreenZone Australia.
Co-founder of GreenZone Australia, Geoff Rimmer said he had seen an uptake of interest amongst planners who felt that an AFSL would render them more independent, as well as increase the opportunity for them to provide conflict-free advice. He said many, however, still held concerns about the levels of support available to them.
“There is no doubt that moving AFSLs or establishing one from scratch is a big decision,” he said.
“But they (planners) are worried about the cost of setting up and maintaining an AFSL, and they aren’t really sure about the steps that need to be taken to get there.”
Rimmer affirmed concern that the establishment of an AFSL from scratch was a large investment, but said the 200 of 400 applications for licenses taken back by the Australian Securities and Investments Commission (ASIC) last year were testament to the need for specialised support.
“That’s a lot of very expensive mistakes,” he said of the licensing ‘fail rate’.
“Holding an AFSL is an adviser’s key to future professionalism enabling the provision of truly independent advice.
“The industry must continue to move towards independence if it is to become a true profession and to ensure planners act in the best interests of their clients.”
Comments
There are a number of very capable support services for those applying for and holding an AFSL, which I believe you should use rather than trying to do it yourself. The cost is not over the top when you consider how much time it would take you to get on top of everything that is required and it will ensure your application proceeds smoothly and in a reasonable timeframe.
You do not to be prepared to make a reasonable time commitment to maintaining your AFSL (1-2 weeks per year), but again help is available.
Advisers need to stop listening to dealer group representatives telling them it is too complex and expensive. If you consider yourself smart enough and honest enough to be a good financial planner you are smart enough and honest enough to operate an AFSL.
It doesn't cost any more than most dealer groups charge to operate your own AFSL and you will finally be able to rid yourself of the conflicts that are sadly way to prevalent in the advice industry. More than 22,000 advisers and less than 100 that can call themselves independent. That says a lot about how conflicted the financial advice industry is.
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