Is self-licensing the future of advice?
Advisers are likely to look towards self-registration with the regulator rather than a licensee model in the future, but self-licensing is not without its pitfalls, according to a panel.
In an Association of Financial Advisers webinar, the panel discussed the future of licensing models and whether they were still fit for purpose after 20 years in existence.
Alex Euvrard, managing director of My Dealer Services, said: “The licencing structure as we sit here today has been around for 20 years. However, the environment with a lot of legislative compliance and otherwise changes is very different and the two are not really aligning.”
He felt self-registration would bring the advice industry in line with other professions such as lawyers and accountants.
“I believe we have to look towards self-registration with the Australian Securities and Investments Commission (ASIC). That’s how it works overseas, and it actually works really effectively.
“Like other professions, namely the accountants, the lawyers, they all operate under the title of a profession with minimum qualifications, but they don't hold it and they don't need a licence structure.
“Instead of being linked to a licensee, advisers are going to be open to picking and choosing different aspects of different offerings. We have already seen it and will continue to see advisers take control of the industry which is good. I think that’s the right thing to do.
“As to the future of licencing, I believe we need to look at unpacking the whole model and structure and move towards something more beneficial to the adviser, the practice and, more importantly, the end client.”
However, Euvrard and fellow panellist Rachel Bell, business consultant at Affinia, warned there were still some cons associated with self-licensing.
“Licensees have pretty highly-developed model where you put everything together, everyone is working together to develop what they are offering the adviser so they are all in synergy and that does help in this ever-changing environment. This leaves more time for the adviser to look after the client,” said Bell.
She said advisers could find themselves with higher costs for items such as professional indemnity insurance when they left a dealer group and highlighted the network of fellow advisers that a licensee provided.
Euvrard said: “Self-licencing brings freedom, it allows you to really explore different products, services and offerings out there which can be bound and restricted within a dealer group.
“On the other side, you need the resources and infrastructure to be able to properly implement that and it’s no easy feat. It's a process and it needs structure and it needs support to be able to set it up properly and effectively.”
He recommended any advisers considering being self-licenced sought out other advisers who could give them real-life experience of the process.
AUTHOR
Laura Dew
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