Dealer groups should acquire struggling small firms for 'good of industry'

Dealer groups should actively acquire small struggling member advice firms for the good of the sector rather than allowing the status quo to continue, according to Kenn Williams, principal of WA advice firm LifeNet, a four-planner member of dealer group Guardian Financial Planning.

Williams said he knew personally of “a lot” of small advice firms, both within and without dealer firms, that are “really struggling” because they cannot and will never get their scale up to ever progress beyond ‘struggle street’.

He said the advice sector would be “better off all-round if the dealerships looked at how they can help some of the smaller ones integrate into a larger practice within the dealer group, or sell into them.

“It would give the bigger practices more scale but also save some of the smaller guys from the worries and issues that go with running a small business in a sector facing unprecedented financial and compliance challenges.

“The dealer groups are dropping a few of these firms off if they don’t fit the mould, but they are also potentially helping to keep others afloat that will always be struggling.”

Speaking at the recent AFA Conference at the Gold Coast, Williams said dealer groups should create an option that would allows these small firms to be absorbed into other practices in the group.

“I think industry is big enough to be able to absorb these firms into their structures without the sector ending up with six or seven monolithic firms.

“There are a lot of practices in the larger 20 to 30 per cent of the sector that could absorb these smaller practices to the benefit of the industry, and the principals and adviser of these small firms.”