Advisers' businesses unsustainable if only looking for cheap licensees
Financial advisers only looking to licensees that have cheap fees is unsustainable, according to a panel.
Speaking at the Association of Financial Adviser’s (AFA’s) virtual conference, Centrepoint Alliance group executive advice services and solutions, Kate Anderson, said “you get what you pay for really whether it’s joining a new licensee or buying a new car”.
“Advisers who are in licensees looking to move or for a cheaper or discounted option, need to go in and have a look and consider transparency, talk to people in their risk and governance area, look at the quality and depth of services they provide, and more importantly over the next couple of years give some type of certainty that the licensee will be around,” she said.
Also on the panel, IOOF chief advice officer, Darren Whereat, said that “discounting to growth in the long term doesn’t work”.
“Succession for the industry is going to be a real issue for the industry for the next five years. By succession I mean big establishments with principals going out and don’t have the next generation coming through,” he said.
“Our role in that is how do we manage our way through that? In terms of instos we feel we need to use the balance sheet at some stage to actually facilitate a smooth transition over a period of time over three to five years in terms of principal exiting and youngest coming through.
“We have to pay a role in that. The days of the vendor financing it alone just doesn’t happen anymore. For the industry’s health we need to successfully manage that and we see ourselves playing an active role.”
When asked what three things advisers needed to focus on, Anderson said the Royal Commission recommendations that were to commence on 1 January in terms of training and education, assisting advisers with developing their technology and assisting them with data led insights.
Matrix Planning Solutions chief executive, Allison Dummett, said advisers needed to bulletproof their back office to free up time to focus on clients, work out a realistic cost of advice, work with peers, licensees, and what the code of ethics meant and embrace professionalism.
Whereat said advisers needed to continue to engage with clients, work with licensees, make new technology possible, and to continue being an advocate for the voice of advice.
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
