FASEA regime confirmed as driving early retirements
The Financial Adviser Standard and Ethics Authority (FASEA) regime has had a greater impact on small financial planning practices and has triggered a greater proportion of early retirements.
That is the bottom line of data collected by financial planning practice business broker, Growth Focus, which unsurprisingly identified that retirement was the number one motivator for sales but also found that the reason for advice owners leaving the industry was the new FASEA regime.
The data pointed to retirement having been a long-time significant motivator in driving practices sales across small, medium and large businesses, but that the difference over the past 15 months has been the requirement to meet new educating standards including completing an exam imposed by FASEA.
“It’s clear that FASEA has had a bigger impact on smaller businesses,” Growth Focus managing director, Steven Fine said. “Some senior managing directors have indicated to us that although they themselves are not going through the education programme, they are in a position due to the size of their business to effectively manage the business without providing direct advice themselves.”
“It’s logical for small practices to leave the industry, as they are not as equipped to handle industry changes, from education standards and licencing fees to compliance requirements and insurances,” he said.
“Small businesses need to have enough top line revenue to justify the existing cost structure. For most, scale is the only answer, however many are exiting instead of buying. On the other hand, larger businesses realise the importance of acquisition and scale at this time, so they are keen to absorb these smaller practices.”
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