Growing dissatisfaction with dealer groups and the realisation that life under the Future of Financial Advice (FoFA) reforms isn’t that hard is behind the wave of financial advisers currently applying, or considering applying, for their own Australian Financial Services Licenses (AFSLs), according to My Dealer Services director, Alexander Euvrard.
Compliance and back-office service provider, My Dealer Services, has experienced a threefold increase in enquiries in the last six months and helped 10 financial planning practices obtain their own AFSLs, pushing the number to 50 in the last four years, and there will be many more to come, Euvrard said.
“Once the FoFA reforms are bedded down and there’s a realisation that it is manageable, that could provide the motivation for advisers to part from their often rigid licensees and provide advice under an AFSL that is more appropriate to the needs of their clients,” he said.
“FoFA was built up to be a much bigger hindrance on businesses than it’s turning out to be, and people are beginning to see that provided the right systems and processes are put in place early, the changes are manageable.”
While the majority of financial planners will always be aligned to an institutional dealer group, Euvrard said the industry would experience increasing fragmentation.
He said that the cost of outsourcing the back-office to a third party was often less than what advisers paid a traditional licensee, citing that professional-indemnity insurance premiums had come down for some of the group’s clients.
“The last three AFSL applications we put through came back with the lowest PI premiums I’ve seen in the last 18 months, which shows insurers are willing to accommodate well run quality businesses,” he said.
“The businesses we assist are established vanilla practices with a sound client base, who have never been in trouble. We’re not interested in taking on clients who want to build their adviser numbers and business up extremely quickly.”
My Dealer Services has a strategic partnership with Libertas Solutions for the provision of compliance, IT, accounting, legal, recruitment and professional development services, and uses the services of insurance broker, Mega Capital, for professional indemnity insurance.
