Advisers should be focussing on the management of their remuneration, not simply on how they will be remunerated, according to dealer group services provider, CommCentral.
In the midst of the current debate over adviser remuneration, CommCentral founder, John Brabender, has told riskinfo that while the issue of fees versus commission is central to the future structure of the financial advice industry, advisers and dealer groups should not lose sight of the importance of how they manage their income, irrespective of how it is paid.
“The nature of the transaction might change, but the tasks advisers and licensees need to perform on that transaction don’t.”
Commenting on the possibility of a future where commission-based remuneration may be phased out, Mr Brabender said “The nature of the transaction might change, but the tasks advisers and licensees need to perform on that transaction don’t.”
Mr Brabender contends that the issue which is at least as important as the current remuneration debate is about which licensees, particularly boutique dealers, will survive the Global Financial Crisis, and emerge from it with a business structure that optimises its back office efficiency to allow maximum productivity.
Mr Brabender and CommCentral advocate the outsourcing of back office administration, including the important area of remuneration and other information management as a viable option for all licensees, but particularly the small to medium advice firms:
“Boutiques are becoming more familiar and comfortable with outsourcing back office services,” said Mr Brabender, who added that the small to medium advice firms would also be the ones who would gain a more immediate advantage from outsourcing in this area.
Having commenced its services to licensees in August 2008, CommCentral details the benefits of its services to licensees as including:
- Ensuring that practices stay focused on their core activities of servicing clients
- The cost of processing remuneration in house is generally more expensive both in direct costs and opportunities lost
- CommCentral is able to use any of the commonly available remuneration software platforms. It is software neutral and does not require a particular software system.
- Staff and management have extensive ‘hands on’ experience in remuneration management and intimately understand the challenges and issues involved
- It reduces key person risk - the remuneration process will continue without interruption
- Enables new practices to better manage their income in the early operational years
- By better management processes, principals are able to more accurately value the worth of their businesses and significantly enhance succession planning objectives
- The peace of mind knowing that the system is fully serviced with ready access to the CommCentral support team
