Specialist consultancy a potential solution for older risk advisers
Older, experienced risk advisers could have an alternative path to stay in the industry without fulfilling the education requirements, as the Australian Financial Advisory Network (AFAN) plans to take on risk advisers as consultants.
Craig Ball and Ian Macpherson established the Australian Financial Advisory Network (AFAN) as a co-op of specialists (i.e. aged care, estate planning, risk, retirement and financial planning, commercial and private lending, and general insurance) and authorised planners who would provide a business platform that allowed risk advisers to remain in the industry.
Advisers had until 31 December, 2021, to pass the Financial Adviser Standards and Ethics Authority (FASEA) exam to be able to continue to operate and give advice.
“Obviously some will be able to sell their books and I expect, be more than happy to leave, however many will be left without a buyer simply because of the volume of sellers in the marketplace,” Ball said.
“Given that they will no longer be authorised to give advice, by joining AFAN they can still continue to work with their clients as an AFAN Consultant.
“They can sit in on client reviews with one of AFAN’s authorised representatives, they can make factual statements about the client’s insurance contracts, they can assist with claims ad administrative enquiries etc. The only thing they cannot do is say ‘I recommend’.”
The ex-risk adviser, now consultant, would maintain the client relationship.
“Many have built a very trustworthy relationship with their clients over decades in some instances,” Ball said.
“If we were to simply purchase their book then it would take us years to emulate that and as you would be aware, the drop-off rate of clients during any business takeover is relatively high.
“Maintaining the relationship via the ‘consultant’ ensures a far higher persistency rate.”
AFAN would remunerate consultants by passing on 70% of the ongoing trailing income and each consultant who joined was guaranteed of receiving this trailing income for a minimum of five years.
“Ideally we want our consultants to stay for a longer period of time, but even when they do decide to retire they then become members of our AFAN Community,” Ball said.
“The AFAN Community allows our retired advisers to continue to pass on their knowledge and expertise to young planners coming through the ranks.”
AUTHOR
Chris Dastoor
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
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.
