Would small IFAs be better off on salary?
The days of small independent financial advisers (IFAs) turning over less than $250,000 may be numbered with dealer group authorised representative costs rising in the face of increased regulation and associated overheads.
That is the assessment of former dealer group head, Paul Harding-Davis who said that many smaller IFAs with relatively low turnovers might be better off becoming salaried advisers from both a financial and risk perspective.
Harding-Davis’s comments came amid reports that a number of dealer groups were signalling that authorised representative costs would be rising to as high $80,000 a year to cover increasing regulatory compliance costs, professional indemnity (PI) insurance and access to planning software such as X-plan.
He said that while some dealer groups were already charging as much as $80,000 a year, he believed that costs around $65,000 were more common.
However, material developed by Viridian after it acquired much of the Westpac planning business pointed to a practice fee of $48,000 a year, together with an authorised representative fee of $22,000 a year for the first to authorised representatives and $15,000 a year for each subsequent authorised representative.
The Veridian material suggested that this meant that a financial planning practice with four authorised representatives would be paying a total of around $122,000 a year.
However discussion of the rising authorised representative costs have come at the same time as the Commonwealth Bank has confirmed a round of adviser and advice-related redundancies within Commonwealth Financial Planning.
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.
