Advisers looking to join a truly independent licensee are experiencing ever-decreasing options, warns one expert, who says the number of non-aligned dealer groups is rapidly shrinking.
Pinnacle Practice Director, Anne Fuchs, said the market was experiencing a reduction in the number of independent licensees, due largely to the impact of the Future of Financial Advice (FoFA) reforms.
“The number of truly non-aligned dealer groups, that are well-established and have a good track record, is now so small I can count them on two hands and have fingers left over,” Ms Fuchs said.
“The fact is that the non-aligned market was not this small this time last year. What the government and ASIC probably haven’t foreseen is that the loss of this whole section of the advice market depletes consumer choice.”
Ms Fuchs said this contraction of choice meant that advisers who want to act independently of institutional influence have fewer places to go, and as a result consumers have narrower service models to choose from.
“I question if that is in keeping with what FoFA originally set out to achieve for consumers,” she said.
Part of the problem, according to Ms Fuchs, is that institutions are increasingly taking strategic shareholdings in boutique groups, in order to attract more advisers into their network. She explained that advisers working under these groups pay heavily subsidised dealer fees and have access to extraordinary resources.
It is not uncommon to see advisers decide that the cost to be non-aligned isn’t worth it
“I am not sure many advisers in these aligned networks truly appreciate this,” she said. “In many cases the penny only drops about how little they have been paying once they have decided they want out. They then have some very commercially difficult decisions to make. It is not uncommon to see advisers decide that the cost to be non-aligned isn’t worth it.”
“What advisers are looking for when they come to me seeking a new dealer group is independence from institutional influence,” said Ms Fuchs, who runs a ‘matchmaking’ service for advisers and dealer groups. “Unfortunately that part of the market is shrinking at an alarming rate of knots.”
“non-aligned’ and ‘independence from institutional influence’ are different from ‘independent’ as defined in the Corps Act. if you get commissions.e.g. you can’t say that you are independent. yes there has been some vertical integration lately but there are still a lot of family-run FP business out there. not convinced by this article. show me the facts
LOOKS like the big boys are out to control the industry even more.
At least if your aligned to a large dealer group owned by an insurance company the ASIC will not cancel its AFSL.
FOFA is going to destroy the industry as we know it and disadvantage all including clients.
FOFA will put the big institutions in control and the family business will be no longer sustainable.
The costs of being an Adviser now are already over the top, the cost of running a business is already onerous not to mention all the red tape.
Tax and company compliance now AFSL and TAX BOARD, ASIC corporate compliance and so on when is it all going to stop?
Perhaps when its all in the hands of the larger institutions and FOFA has destroyed the industry and any hope for the average Australian being able to afford financial planning they will notice the destruction the Government has created.
Im glad I out to retire this year good luck to you all
This lady Anne Fuchs is only trying to support her own cause. Good luck to her.However she must recognize that financial planners are as not a silly as she would like them to be . This is the lady that stood up at an AFA principals meeting and said we should all accept FOFA and we should all follow what Steve Tucker says and believes. Now if we all did that we would ALL be out of a job
I am a fee for service adviser with a truly independent dealer group, Premium Wealth. This allows me the freedom to provide clients with the advice that best suits their needs without institutional influence. It is because of this that I believe there will always be a place for independents in this industry. Please feel free to contact me thru the FPA if you would like to know more about my experience with this dealer group.
I would like to respond James Walker-Powell’s comments for the record. At an AFA Conerence three years ago Treasury attended a licensee leadership lunch. At this lunch I stated that FoFA was not going to go away and if Treasury and the government did not understand what we do, rather than accusing them we should look in the mirror and question whether as an industry we have articuled the value of advice effectively enough. I cited Steve Tucker as a person who had commented on this particular challenge on a panel discussion earlier that day at the AFA conference. I still believe we have a long way to go in uniting as a community to articulate all the good advisers do day in day out.
Also for the record, there are many great independent dealer groups out there though no where near as many as 2 years ago which I believe is stating the obvious. My comments aimed to highlight the cost of being non-aligned and the mismatch of expectations of advisers from aligned dealer groups seeking a new non-aligned AFSL.
Comments are closed.