Written by Ryan Goodfellow, National Growth Manager at Centrepoint Alliance
It would be an understatement to say that 2018 was challenging for AFSL holders and financial advisers. Unfortunately, 2019 isn’t shaping up to be much better.
FASEA and the Royal Commission will continue to deliver significant industry changes and we will see tighter supervision and investigation from regulatory bodies such as ASIC and APRA. As we enter a new year, there are specific themes I’ve noticed across the various dealer groups and macro trends fuelling interest in self-licensing and the desire to change dealer groups.
Large institutions have had their share of ASIC notices and requests for further information and this doesn’t seem to be slowing down, resulting in significant admin and compliance work for both self-employed and employed advisers alike.
I’ve noticed a big spike in self-employed firms from larger institutions enquiring and applying for their own license. Principals are seeking help to navigate what they need to do, have contingency plans in place, as well as understand the upfront and ongoing obligations of being Responsible Mangers on their own license.
For many larger corporatised financial planning firms, it makes sense to get their own AFSL once they are fully equipped with the relevant information and they have made capacity for their ongoing obligations.
However, when advisers suggest they are getting their own AFSL because it’s going to be cheaper or that a dealer group’s compliance is too tough, alarm bells immediately start ringing.
Due diligence is critical when considering your own AFSL. As is talking to professionals and peers who have gone down the path before you. My recent podcast series will give you a head start on making an informed decision.
On the back of a number of boutique AFSLs having their license cancelled in 2018, I’ve had a number of AFSL’s with one to twenty ARs approach me for compliance support and access to AFSL support services.
It’s clear that ASIC, with its self-funding levy, is aiming to have a higher scrutiny of AFSLs moving forward. Smaller licensees that don’t have scale and infrastructure are coming unstuck as they don’t have the resources for robust supervision and auditing of their ARs.
This becomes a red flag to ASIC and triggers greater scrutiny. In some cases, it has led to AFSLs being closed and has left ARs without an authority, making it challenging to find a new AFSL that aligns with their value-set.
Another trend I have noticed is that some firms approaching us from smaller AFSLs haven’t been audited regularly, or not at all. And their authorisation in certain advice areas has not been backed up by ASIC registered training organisations or courses.
I think 2019 will continue to provide some challenges for advisers that aren’t aligned with a dealer group that takes their ASIC obligations seriously and invests in running their AFSL.
My tips for 2019
- If you are thinking about getting an AFSL, spend the time talking to a broad range of people to get a clear understanding of what it will really cost and what the process entails. Have a look at our AFSL checklist to help you ascertain your suitability for self-licensing.
- If you are an RM of an existing AFSL, engage with an AFSL support service to tap into the infrastructure and support your business will need to stay compliant.
- Finally, if you are looking for a new dealer group, do your due diligence carefully and have a plan B.
Whilst 2019 looks to continue with significant change and tighter regulation, the future is bright for those that see that opportunity is everywhere.
If you would like to book in a time to have an initial discussion as to how Centrepoint Alliance may be able to help you, please book in a phone catch up.