The licensee of the future will either be a large, institutionally aligned business or a small advice ‘collective’ predicts industry research house, CoreData.
The researcher has released a white paper which investigates the future of licensee models within Australia, warning the middle ground is a ‘treacherous place for licensees’.
‘The traditional dealer group model, whereby the industry is structured around licensing requirements and advisers pay a fee for licensee services, is broadly considered to be dead in the water.’
The traditional dealer group model is broadly considered to be dead in the water
According to the researcher, the change in the licensee landscape has been prompted by legislative change (including the removal of volume payments to licensees), and an increased focus on the end-customer.
The paper contends that the ideal licensee of the future will play a much more intimate role in the lives of its advisers, with key aspects being educational support, training and leadership, so the adviser in turn can become closer to their client.
‘Differentiation through products, services and leadership has never been more important for Australian dealer groups and requires a deep understanding of the evolving needs of advisers and their clients which can only be achieved through intimacy.’
In order to develop this intimacy, the researcher believes licensees will need to be either: large and vertically integrated, with an ability to leverage scale, or small and boutique – providing a high-touch, quality service.
‘Mid-sized players are likely to be swallowed up by opportunistic licensees seeking growth through acquisition, or be forced to exit the market as their business models come under increasing cost pressures,’ CoreData said.
