The next generation of financial advisers are being deterred from entering the profession due to its current structure which is preventing them from purchasing small books of business as self-employed, non-aligned advisers, according to one industry consultant.
Connect Financial Service Brokers Chief Executive, Paul Tynan said the concentration of licence ownership among corporate entities and the presence of Buyer of Last Resort (BOLR) arrangements have inflated the costs of advice books at a time when the sector needs to attract more advisers.
Tynan said new entrants who chose to be self-employed practitioners owning their own business were being deterred by these factors and were struggling to find a small book of clients to start a business and their advice focussed careers.
“Unfortunately this is yet another consequence of the industry’s concentration with the majority of licence ownership in the hands of six corporate entities. A further outcome of concentration is the industry’s BOLR arrangements that has further incensed many and contributed to the lack of books on the open market,” Tynan said.
“I receive enquiries on an almost daily basis from financial planners who regard BOLR books as just telephone numbers…”
“The organisations and licensees who have a BOLR structure would say that this is the way they attract new planners into their business model. In contrast I receive enquiries on an almost daily basis from financial planners who regard BOLR books as just telephone numbers and have been purchased at overinflated industry prices”.
Tynan also stated that new entrants were also being deterred by ongoing debates over academic qualifications, professional development standards and the structures of products with professional associations distracted by this issues instead of promoting advice to new entrants.
“Regrettably these industry bodies have found themselves needing to focus on lobbying government whilst simultaneously trying to remain relevant to the changing needs of their members with education standards, conferences, roadshows and workshops”, Tynan said.
“To remain relevant in the future, professional associations will need to be far more proactive with significant investment of resources needed attract new industry entrants with business owner mindsets and supporting their mature age members to successfully exit the workforce into a financially secure retirement”.
