The groundswell towards self-licensing is not surprising, but there are many factors advisers should consider before sailing under their own flag says Soula Cargakis, Distribution and Marketing Executive for Centrepoint Alliance.
The recent Momentum Intelligence Dealer Group of Choice Survey showing many advice firms are considering switching to a non-aligned licensee or self-licensing is compelling but not surprising. It shows there is a strong groundswell of advisers wanting to take control of their future and not be dictated to by the structural self-interests in the industry.
However, it would be wrong to draw the conclusion that self-licensing is a realistic or even desirable option for the vast majority of advice businesses. Or that the role and value of a dealer group is completely diminished.
If anything, it shows that advice services firms, whether they are dealer groups or other service providers, are going to have to compete on their merits – on the value they provide and the value they add to the advice firms they are supporting.
Are they actually in the business of empowering and delivering quality services to advice businesses or are they more interested in their own interests and acting merely as regulatory gatekeepers?
At Centrepoint, we don’t believe there is one best business model for all advisers. It depends on so many things – your business, your clients, your client value proposition, your leadership team and your appetite for risk and governance.
Whether you are an authorised representative or self-licensed, you will need to leverage economies of scale and specialist expertise in a whole range of areas – from compliance and technology solutions to business strategy and succession planning.
And you will want to partner with an advice services firm that respects your professional integrity and whose values you share. You will want to be part of an advice community that shares your passion for good advice, energises you to succeed, and which provides the opportunity to share resources, knowledge and innovation.
You can do all these things both as an authorised representative and under your own licence. But you need to choose carefully.
Many advisers and practices are more than happy to focus on servicing their clients and not extending their business responsibilities – and there is nothing wrong with that. You can provide great client outcomes, have a great career and build a very successful business this way.
It may also be that at some stage you want to take the next step, obtain your own licence and become the master of your own destiny. The rewards can be great both professionally and personally.
But so are the responsibilities and this step should only be taken after very serious consideration, extensive planning and putting the right support structures in place.
As a licensee, you need to be comfortable taking responsibility for every aspect of your practice and business, including quality of advice, compliance and risk management. Your professionalism, independence and reputation will be critical to your long-term success.
You need to have a clear idea of who your clients are and the value proposition you want to deliver. In short, you need a very clear vision of how you will run an efficient and profitable practice.
What the successful ones have in common is they specialise in areas of expertise. For some this is investment strategies, others delivering full service financial advice and others operational efficiency. The most successful, both financially and in terms of life balance are those that focus on their specialisation and outsource as much of the rest as possible.
If you do want to take control of your destiny, there has never been more help to guide and support you on this journey. This includes the full range of services from business planning, coaching, integrated CRM and compliance systems, including full compliance templates to help get new licensees up and running. It is critical that licensees on their new journey are very quickly able to focus on generating revenue and delivering quality advice.
Perhaps the most important thing to remember when you set sail under your own flag, is that you don't have to do it all on your own. External assistance is available from experienced professionals who have dealt with the same issues many times, as have other practices that have been on a similar journey.
It is great that more advisers are considering what model is right for them and their clients. It’s great that they are putting adviser services firms under greater scrutiny and holding them accountable.
But in considering your future, just make sure your decision is about you, your business and your clients, and not what others are saying about preferred industry models.
Interested to learn more about the requirements of self-licensing? Download our handy AFSL checklist to determine if you're ready!
This article was written for and first appeared in IFA.