Big AFSLs don’t represent majority of advisers
Big licensees no longer dominate the Australian financial planning profession and, in fact, barely account for a quarter of financial advisers listed on the Financial Adviser Register (FAR).
In the wake of last week’s release of a Financial Services Council (FSC) green paper ahead of the organisation’s advice-focused conference a debate was generated about licensee scale and standards.
The debate was coloured for some advisers by the fact that the FSC represents the larger licensees including those which have evolved out of AMP Limited and Insignia Financial.
Thus, the FSC’s membership list reveals the following advice-first companies as full members:
Count Limited
Entireti
Infocus Wealth Management
Rhombus Advisory
WT Financial Group
According to WealthData principal, Colin Williams the companies, taken together, account for 3,828 of the 15,364 advisers currently on the Financial Adviser Register (FAR) or 24.9%.
He noted that there are only four firms with 500 ore more financial advisers and that they account for 18.09% of the total adviser market.
This then needs to be compared to 20 firms with between 100 and 499 advisers, who account for 26.97% of the adviser market.
Williams points out that advice licensees with more than 100 advisers still amount to just 45.06% of the financial adviser market with the majority of advisers employed by smaller licensees and, indeed, so-called micro-licensees (self-licensed or employing two or three advisers).
The big dealer groups are bleeding. Their best financial advisers are waking up to how easy it is to set up their own licence. It’s cheaper and far more efficient. Services and processes can be more client friendly. The big AFSL’s are being left with the lowest common denominator. This is why they are attacking small AFSL’s.
“Big licensees no longer dominate the Australian financial planning profession and, in fact, barely account for a quarter of financial advisers.”
Huh? The data shows licensees with more than 100 advisers account for 45.06% of the market. Surely more than 100 advisers is big in anyone’s estimation?
But the real issue in all of this is not how big an adviser’s licensee is. It’s whether the adviser is under the influence of a company that sells inhouse product. The licensees listed as members of FSC are not “advice first”. They are product companies that use influence over advisers to distribute their inhouse products. That’s why they are members of FSC, and ultimately why they exist.
Those products may not be branded managed funds like the AMP, BT, CFS or MLC of old. Increasingly they are SMAs and packaged SMSFs, often with a few of their own well disguised funds thrown into the underlying portfolio. But they are still products, and are ultimately the primary driver of profitability. Large scale advice licensing on its own is not profitable, and comes with enormous risks. It’s only financially viable if the product revenue generated is significant.
The FSC’s bleating about licensing models is nothing more than lobbying by product companies for greater influence over advisers, in order to sell more inhouse product.
The AFSL system is not a benefit for Australians it’s a dinosaur regime left over from 1985.
The more red tape the more these AFSL’s can justify there existance. These Compliance people sit there in front of ASIC and tell them to bring on the complexity.
I’ve witnessed it first hand. These AFSL love renewal dates, complex long SoA’s you name that red tape and it’s all in their interest to continue it. They sit there when consulted by ASIC and go…. yep sounds great. ASIC asks if any objections and none are ever raised.