Would small IFAs be better off on salary?

independent-financial-advisers/IFA/Paul-Harding-Davis/viridian/commonwealth-bank/commonwealth-financial-planning/

14 November 2019
| By Mike |
image
image
expand image

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.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 3 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 3 weeks ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 3 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 1 day ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

2 weeks 6 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND