Dealer networks are reporting an increase in planning practice enquiries as uncertainty over Future of Financial Advice (FoFA) reforms and changes to platform technology have many principals weighing up their options.
In particular, smaller dealer groups are offering discounted rates to planners who have left their FoFA compliance to the last minute.
Chairman and CEO of national dealer group Sentry Group Advice, Murray Hills, says elements within the industry are battling to retain existing advisers while incentivising new recruits to join their organisation.
“The new FoFA environment and increasing demand for dealer groups to provide competitively priced services and programs to support the individual business models of advisers will be high on the ‘shopping list’ of all practices and principals,” he says.
Hills added that Sentry has costed its offer to be competitively sustainable for advisers who are now looking for stability and leadership from their dealer.
“There is a lot of discounting and a price war going on particularly with the smaller dealer groups, which will only cause serious heartache for advisers in the future,” he says.
“The better advisers understand that, coupled with service and reliability, it is in their best interests for their dealer group to run a profitable business, and never more so than with FoFA around the corner.”
Financial planning group, Premium Wealth Management, recently recruited Pearman Financial Management, bringing the total number of practices under its masthead to 21.
While CEO Paul Harding-Davis has ambitions to grow the business to 40 to 50 advisory firms, he hasn’t set a specific goal for 2012.
The group is actively recruiting advice firms who wish to maintain business autonomy in the wake of wide-scale buy-outs by major banks and institutions.
“What is more important to us is ensuring the recruitment of advisor firms that fit with the Premium culture and model,” he says. “Our aim is to add a few high quality practices such as Pearman each year.”
Harding Davis agrees that the prevailing mood is concern about the level of uncertainty still remaining about much of the new legislation and the timeframe involved, particularly the changes to software and platform technology.
However, there may be a silver lining.
“In some respects, FoFA strengthens the positioning of a group that facilitates advisers being able to use a variety of solutions depending on what works best for the client and their adviser,” he says.
It is this flexibility that appears to have been the clincher for Sydney’s Pearman Financial Management – a specialist practice focused on risk insurance.
“We were looking for a business model that would allow us to further develop our risk management specialisation,” says principal advisor, Glynn Pearman.
“Premium offered a far more flexible model than other dealer groups, one that allows us to manage our clients in the way that has worked for us for many years.”
Pearman Financial Management is comprised of two principals and four staff and services approximately 500 individuals and families on Sydney’s North Shore.
Andrew, its dissapointing to see you print articles like this with commentary from Licensees who really don’t tell the whole truth, which is probably whats wrong with our entire industry. Advisers are leaving large dealers, due to numerous reasons, the most prevalent being a total lack of service, contact or understanding of their business. The large dealer groups forget that its every individual planner that builds the dealers business, but the large dealers only fall all over themselves for the planners that produce the most revenue, holding them up as shining lights that all should emulate.
Planners are moving because if the GFC and the fallout that followed showed us anything is that there is no protection for the planner inside a massive licensee organisation that is owned partly or wholly by a funds management business or a bank, there is no protection behind approved products lists or massive layers of irrelevant compliance that if anything just confuses the end recipient “The Client”.
As a part owner of a Licensee business, I also disagree that small dealers are not ready for FOFA or a leaving things to the last minute, its the small dealers who are probably more prepared to deal with the FOFA changes as we do not have the same baggage as the larger groups we have no corporate masters to satisfy with funds flow. Smaller dealers can move and act quickly, we are not slow and lethargic, we don’t need to sack all our BDM’s when the going gets tough and remove all support to those who actually support the business.
As a small dealer, we have brought on 50 representatives in the last 12 months. Why? not because we discount, because we actually take the time to understand our planners and their motivations, goals and aspirations, because those that run the Licensee also work at the coalface with their own clients, so understand the very real nature of providing advice to clients, we do not sit in Ivory towers dictating how things must be done, and making decisions based purely on what is profitable.
As another example, the issue around scaled advice that is one of the FOFA changes, was already in existence via FSRA, but was ignored by the larger licensees, why?
The majority of planners want to get back to the basics, providing good quality advice in a format that is legally compliant, competitively priced and above all can be easily understood by clients, that’s the bottom line, the rest of it is all white noise!