Some dealer groups don’t always act in the interests of advisers. We
recommend considering several key, non-negotiables when choosing a
licensee.
Pre-FOFA, few predicted the growth from the independents and also the decline with the institutional advice sector in the last 5 years.
The current ASIC report into issues in the institutional vertically incorporated business advice models will simply accelerate the migration to the individually owned/independent space.
The basic principles of FOFA and customer education were going to eventually give up and politically harm the institutional advice models.
Any migrating advisers possess basically two choices; manage to get their own Australian financial services license or become licensed to the independent financial planning dealer groups. Considering they’ve been negatively influenced through the years to prevent the required operating an AFSL, choosing the proper dealer for an adviser’s situations is key critical decision.
With change comes possibility, but additionally new dangers to become wary of. Large national dealers will have top of the hand with being selective on who they’ll license and just what the cost will be, but as the recent past has shown, not every dealer have a similar model.
It has also indicated that price is just one facet of making the best decision for an adviser’s particular requirements and circumstances. It’s a fruitless exercise to pick a dealer based only on price when ASIC is having a detailed look at if the ‘cheap’ business models are sustainable.
One other related issue which has risen over the past Ten years is advisers being practically discriminated against because of the poor market perception of the dealer they’ve been with.
This ‘damaged goods’ perception has occurred frequently in the last Ten years, with advisers shifting from banned or poor perception dealers and achieving real difficulties locating a new home.
Like most matters in life, prices are important, but it’s just one consideration. We recommend conducting a basic SWOT (strengths, weaknesses, opportunities, threats) evaluation that includes the next non-negotiable before joining a specific group:
The market trustworthiness of the dealer with a selection of peers and when they have been had the latest severe ASIC attention.
Get a legal opinion around the adviser agreement, in particular the termination clauses.
Meet the dealer management and the ones you have to deal directly with to evaluate compatibility.
Do you have your clients and may you take all of them with you if moving forward?
Does the dealer instantly put aside your share associated with a fee/revenue obtained upon receipt?
What time delay can there be in between receipt of a dealer group of funds as well as remittance to you?
Can you leave the audience without restrictions or even commitments?
Do you’ve restrictions on management services/platforms/software you should use?
Changing dealer groups is really a time intensive, costly exercise which adversely affects daily business activities and could be unsettling for clients. Recall the old adage, in case you ‘pay peanuts, you will get monkeys’, we recommend satisfying the above mentioned eight issues then look at the price and initiate negotiations.
Read more at – medium.com/@afsllicence
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