The Future of Financial Advice (FoFA) regulations are tipped to lead to an increase in the demand for independent licensee services as growing numbers of financial planners consider the best way to provide advice to clients.
Matthew Heine, an executive director at financial services company netwealth Group, says FoFA will force a segmentation of the advice market. He thinks that advisers who opt to go the independent route and obtain their own Australian Financial Services licence (AFSL) will be looking for different services and support than their institutionally aligned counterparts.
According to Heine, dealer services fall into three broad categories:
• Compliance and risk
• Professional development and education
• Software support and practice improvement.
He says FoFA is likely to be a minefield for advisers in coming months, and effective dealer group support will be “fundamental in really helping licensees and advisers to navigate the maze of new regulation that is going to be pushed upon them”.
“The small business or small licensee just doesn’t have the resources, in most cases, to start to work through all those areas,” he explains.
“I think the changes in the industry are going to start to segment the type of advice that firms are going to be able to provide.”
Rebranding opportunities Heine believes that advisers housed within institutionally aligned dealer groups will start to look for alternatives outside those institutions.
A number of those advisers will consider acquiring their own licence.
He says this process can be smooth and relatively straightforward, provided the adviser has the right partner.
“The entire process can take a little as three months, from start to go,” he says.
What’s more, an adviser will be able to continue working with her existing licensee right up to the day she switches over to her own licence, so the financial interruption to business can be minimised.
Heine says the netwealth Group is fielding an increase in inquiries from planners considering setting up on their own. Since netwealth Group purchased Paragem Dealer Services in November last year, it has rebranded the company as Pathway Licensee Services.
While the change is largely cosmetic, when netwealth purchased the dealer services business, it was agreed to rebrand fairly quickly.
Netwealth has appointed Kate Humphries as general manager of Pathway. She has previously worked at Financial Services Partners, DKN, Lonsdale and Zurich, and has also run her own consulting business.
