Price not the only factor when picking licensee
Expectations from advisers will increase on their licensees around the quality of services and depth of expertise now that there is more regulatory certainty surrounding the industry, according to Centrepoint Alliance.
Speaking to Money Management, Centrepoint Alliance’s chief executive, Angus Benbow said consolidation and aligned institutions shedding their advice arm would lead to advisers looking for high quality licences.
“Unfortunately because it is such a hard decision and is very complex. A lot of advisers haven’t had to make that decision for a long time and many are only focused on price,” he said.
“Advisers need to look past just price and discounting and look at who they are actually partnering with.”
When picking a licensee Benbow said three main points advisers should look at were transparency, certainty and quality.
On transparency, Benbow said advisers needed to look at who owned the licensee, ask for a copy of its profit and loss statement, cashflow forecast, and balance sheet.
“If they are not prepared to provide then they have to ask questions around transparency. Because they would be asking the same thing for any investment they make for clients,” he said.
Advisers also needed to be certain that the licence would be around for the long-term as making a licencing choice was “not just a transaction or a commodity”.
“They need to look at its financials and level of governance and compliance in investments and corporate services to make sure they are doing the right thing,” Benbow said.
Advisers would also need to analyse the quality of service and solutions as these were the elements that would support their business.
“Do they have the breadth of services that they are going to need as an advice business, whether it be from business management, to advice, technology, technology support services, and whether they have the depth in terms of quality of those services,” he said.
Benbow said this year would be a more positive year for advisers as many of the industry’s regulatory changes and political uncertainty had already played out.
Recommended for you
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
Morningstar has made two business development appointments to drive the growth strategy of its financial advice software, AdviserLogic.
