Financial Planners Embrace Self-Licensing 

More planners are turning to self-licensing, however the dealer group model will continue to play a major role, according to the latest Licensee Satisfaction Report from research firm Investment Trends.  

Recep Peker, Research Director at Investment Trends

The report also revealed that financial planners are undeterred by heightened regulation and FASEA.

The research found almost a quarter of financial planners say they either operate their own AFSL or belong to a self-licensed boutique (24 percent, up from just 15 percent five years ago). In the next 12 months, a further 10 percent say they intend to take the same route.

“More planners are moving away from the traditional licensee model, believing they can deliver better outcomes for the end-client by taking full control of their operating environment, value proposition and product set,” says Recep Peker, Research Director at Investment Trends.

The majority of self-licensed planners (85 percent) rely on external support to operate their advice business, particularly for compliance/audits, professional development and research, and as a result, Peker says they expect to see growing interest and utilisation of solutions that can satisfy their wide-ranging needs.

He also noted that although most financial planners will continue to rely on the dealer group model (with 55 percent intending to remain with their existing dealer group), dealer groups can do more to support their network of financial planners.

“Dealer groups remain the backbone of the financial planning industry, and many planners believe that the support, guidance and services provided by their dealer group outweigh the self-licensed model,” said Peker.

“Among those who are part of a dealer group, nine in ten (91 percent) seek further assistance from their dealer group – from support with lifting back office efficiency to ongoing client engagement,” he said.

The report concluded that the advice industry remains resilient despite more compliance and regulatory requirements on the horizon.

The research showed that 11 percent of financial planners say they intend to leave the industry if the full recommendations of the Royal Commission are implemented, while 7 percent say they will cease providing advice when FASEA’s education requirements come into effect in 2024.

However, the issue of serving clients in an affordable manner is also a growing concern, with the report showing significantly more planners say they are facing obstacles in providing affordable advice (43 percent, up from 33 percent in 2018) and reducing the cost of advice (39 percent, up from 27 percent).

“While heightened regulation will add time and cost pressures to their business, the vast majority of financial planners have no plans for leaving.”

“While heightened regulation will add time and cost pressures to their business, the vast majority of financial planners have no plans for leaving,” said Peker. “However, planners recognise the need to evolve their business not only to satisfy regulatory standards, but also to meet the demands of shifting consumer preferences and an uncertain investing climate.”

When asked how the Royal Commission will impact their planning practice, over two in three planners (69 percent) intend to accelerate their adoption of technology to better serve their clients.

“By using technology more effectively, planners believe they can enrich their client engagement capabilities, helping them better demonstrate value to existing clients and to expand their pool of potential clients,” said Peker.

The report is based on an in-depth study of 1,030 financial planners concluded in May 2019.

  • Ken

    Congratulations to all those taking on this difficult transition Apart from the obvious cost saving ( which we are all looking for at the moment) due to commission decreases it can be a positive result and a driver for better business activity
    However I trust all that do this look right into what is required and get it right as I have no doubt ASIC will hit hard on new licensees without any mercy for those who do not comply

  • PS

    So first it was agents and master agencies that had to be replaced in 2004 by the AFSL model. Now the ‘big’ AFSLs are being seen as not providing the best potential advice model. Now it is becoming the boutique AFSLs that deliver a better proposition. What next? I’ve got an idea, let’s go back to agents and have the life offices carry the compliance burden and costs. Back to the Future I say!