Exiting Advisers Urged to Consider Options

Risk advisers contemplating closing their business and exiting the advice sector should first consider other options, says Caboodle co-founder, Warwick Hearne.

Hearne has told Riskinfo he fears the possibility of a mass exodus of risk-focussed advisers from the industry as a result of what he refers to as the ‘double whammy’ of the Life Insurance Framework remuneration reforms and the phasing-in of FASEA’s new minimum education qualifications.

According to Hearne, however, those advisers and advice businesses looking to exit the sector should think twice before deciding to shut-up-shop. While he accepts the Baby-Boomer generation of advisers will be looking to transition out of the industry in the coming decade, he says options do exist for those who prefer to maintain their business and continue to deliver value-added services for their clients.

advisers …looking to exit the sector should think twice before deciding to shut-up-shop

Hearne said his Caboodle business model was growing in popularity for advisers looking to offload some, but not all, of their client commitments:

“My thinking is that we are a perfect partner to take over some of the portfolios of risk clients from riskies looking to exit,” said Hearne, who emphasised the Caboodle business model often focusses on the ‘C’ and ‘D’ segment within the adviser’s portfolio of clients.

He said Caboodle’s commercial offer revolves around a revenue share for the first ten years of any arrangement, which sees Caboodle assume formal servicing responsibility for this lower-value segment of client portfolios – advising those clients who Hearne says are increasingly more problematic for risk practices to service from a compliance perspective.

He added his firm could also assume responsibility for providing quality, compliant advice to entire client books, based on his firm’s revenue share offer.

Hearne explained that in the circumstance where a mortgage broker has operated a risk advice business on the side they would still have the option to maintain the mortgage broking relationships – should they wish – but cease giving new risk advice and that they would not be required to hold a financial planning licence or observe the new minimum education standards.