Salaried advisers signal preference for self-employment

Given the choice, a majority of salaried financial advisers would prefer to be self-employed authorised representatives (ARs).

That is one of the key bottom lines of a survey conducted by Money Management seeking to determine the attitudes of financial advisers amid the intense competition being exhibited by licensees to attract financial advice practices amid the uncertainty created by transactions such as IOOF’s acquisition of MLC Wealth and the restructuring being undertaken within AMP Limited.

Asked if, as a salaried adviser, they would prefer working on a self-employed AR basis, nearly three-quarters of respondents answered ‘yes’.

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But, just as importantly, the survey revealed that most advisers were cautiously open to changing licensees in the right circumstances with more than 70% stating that they were not entirely happy with their existing licensee.

And the major reason for that unhappiness appeared to be the lack of a personal approach on the part of their existing licensees and the notion that, in many instances, dealer group were being run by people without financial planning experience.

Common explanations amongst those unhappy with their existing licensees was that those running the dealer groups were more interested in protecting the licensee’s brand rather than looking to the interests of advisers and their clients.

In a number of cases, survey respondents cited a licensee’s preference for serving the needs of salaried advisers over the needs of ARs.

Some respondents were also critical of the technology made available to them via the licensee and the amount being levied on ARs to cover the cost of that technology.

Hardly surprisingly, respondents who identified themselves as working under AMP, IOOF and MLC licenses signalled that they were most interested in the possibility of changing licensees and that they were aware over overtures having been made to the principals of the advice practices within which they were working.

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The whole concept of ARs is outdated and inappropriate in the current era. ARs were built into the Corps Act as a way for product providers to retain control over third party "sales agents". It never should have happened, and many of the problems of the last 20 years stem from that mistake.

It is too difficult for licensees to exercise their supervision and control obligations over self employed third parties. That's why so many licensees are shifting towards salaried employees. Conversely it is too difficult for self employed advisers to operate with much independence, when their hands are tied by a third party licensee with an inhouse product sales agenda.

All advisers should be either self licensed, or salaried employees of a licensee. ARs should be scrapped.

Considering the AFSL system costs Advisers approx. $500 million per year, a lot Advisers wonder why they are forced to pay these costs. The system needs to be scaped.

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