The traditional dealer group model is dead and the licensee of the future will need to play a far more active role in the day-to-day lives of advisers.
This was the message from Kristen Turnbull, head of advice, wealth & super at CoreData Consulting, to delegates at the second Professional Planner Dealer Group Summit.
Speaking on the topic of “The Licensee of the Future”, Turnbull said leadership has never been more important in an industry facing both corporate remodelling and legislative reform.
Turnbull’s presentation was based on a white paper produced by CoreData Consulting last month, which explores the key ingredients to a successful and sustainable licensee.
The research concludes that it is no longer viable to be a mere service provider and that licensees are increasingly playing an active role in the lives and careers of their network.
Geoff Rogers, general manager at NAB Financial Planning (NAB FP), believes we will see more disaggregated advice in future, and that the structuring of the industry around licensing requirements is a fallacy.
“The licensee is just one part of the distribution – it won’t be the only part,” he says.
Tony McDonald, chief executive officer at Snowball, who has announced his intention to leave in 2012 following the merger with Shadforth Financial Group, sees licensees moving away from the concept of offering commodity services to advisers and a greater degree of “connection” between adviser and licensee.
He describes a need to keep things “close to the mothership”, adding that he anticipates a greater deal of lock in between adviser and licensee and further corporatisation of business models.
McDonald attributes the corporatisation of the licensee to three factors: more discerning clients, regulatory change and the “calling into question” of the traditional dealer group model.
Mark Ballantyne, general manager at Financial Wisdom, agrees more partnership models are likely to emerge, and believes there will be a greater need for repeatable processes that allow licensees to deliver on their service promise.
The research predicts a greater collaboration between licensees and super funds, which it says is evidenced by the one-year referral partnership agreement between AustralianSuper and six fee-for-service dealers, signed earlier this year.
AustralianSuper piloted the arrangement with Godfrey Pembroke Limited (GPL), Matrix Planning Solutions, Dixon Advisory, Woods & Partners, Paul Moran and Switzer Financial Planning to provide members with a full range of advisory services from contributions levels to insurance arrangements.
Tom Reddacliff, managing director at GPL, says the referral partnership will create opportunities for the licensee, particularly with regards to access to high-net-worth clients with more complex advice needs.
The “licensee of the future” will also need to assist advisers in fostering and improving their client engagement – especially in the light of the opt-in reform.
Many licensees have or are in the process of making significant investments in training programs to assist their advisers in honing their pricing structure and transitioning to sustainable, fee-based models.
Neil Younger, general manager at Commonwealth Financial Planning (CFP), says it is critical for licensees to play a bigger role in helping advisers to extract value from their businesses, and that includes developing customer value propositions that are clearly aligned to client needs.
