Financial advisers who have been using their own AFSL to run a business can sell the AFSL once the clients have been moved off the licence, according to Radar Results, which specialises in M&A activity in the financial services sector.
In its latest newsletter the company says there has been a significant demand for “…vanilla style AFSLs” particularly now with many larger licensee groups shedding their advisers.
It says that just after the release of the Banking Royal Commission Report in February 2019, it was estimated that approximately 600 authorised representatives (ARs) per month were being removed from the ASIC register. Many were having their AR status cancelled because they were too small and not profitable for the licensee group.
“Many advisers were asked to either find another licensee or retire. If they were unable to find another licensee to join, then an option was to apply for an AFSL, but this can take 12 months,” the company explains.
“A solution was to buy an AFSL in the marketplace, which means they are licensed quickly, possibly within a month or so.”
Radar Results says the cost to buy these AFSL’s can range from $20,000 for a basic vanilla one, up to $100,000 for one that provides options and derivatives trading and may also include a Managed Discretionary Account (MDA) service. It notes that an AFSL that has Forex trading capability can command $1 million, but that these are rare.
