After a merger or acquisition, some financial planning businesses choose to combine their separate compliance frameworks. But in the case of Australian Unity’s and Premium Wealth Management, the distinction between the two systems is being deliberately maintained.

This is because the two Australian Financial Services licensees offer quite different services for their clients and advisers – despite both offering holistic financial planning and having similar advice cultures.

While Premium and Australian Unity maintain their individual AFS licenses now – and will do so for at least the next one to two years – even when they merge, these distinctions will remain.

“You don’t need two licenses…at some stage, there’ll be some more governance efficiencies to be gained [by combining under a single AFS license],” says Paul Harding-Davis, chief executive officer, Premium Wealth.

When it comes to compliance, he says: “We can’t deliver those things centrally…you have to approach it completely differently.”

“A fundamental difference is that everyone at Australian Unity must use XPLAN, whereas at Premium, [advisers] can choose which financial planning software they want to use.”

Harding-Davis refers to Premium having a philosophy of advisers being free to choose a package that suits them: “It’s a case of customise versus standardise.”

However, he believes that giving Premium’s advisers access to Australian Unity’s XPLAN package is a considerable benefit. “Australian Unity has one of the best XPLAN audit environments in the industry, we’re making that available to those practices who wish to avail themselves of it,” Harding-Davis says.

Each of the two licensees has its own board, governance structure and compliance plan. “Premium remains a separate dealer offering and license. The Premium advisers operate under a different model, so the approach to compliance has to be quite different,”

One of the key distinctions of Premium Wealth is its value proposition for accountants – something that becomes even more valuable given the July 16 expiry of the existing limited licensing regime.

Harding-Davis says the group is now in the market for accountants to join, along with financial planners, who are catered for within its five different offerings.

These include an ‘incubator’ program; the standard Australian Unity offering and the standard Premium offering which is ideally suited to planning practices with existing accounting services.

For planners seeking to join Premium, Harding-Davis says it takes a range of steps. Any new advisers must meet with at least two senior people from the licensees. “We do reference checks, and particularly if there are time issues, we send a compliance manager into their office for a day.”

Australian Unity, when fully staffed, employs a head of legal risk and compliance, a financial service lawyer and four other compliance staff. Following the merging of the two groups, Premium’s compliance manager now reports into the head of legal risk and compliance, “we’re benefiting from the shared resources,” says Harding-Davis.

Adviser compliance

Before any candidate is formally appointed, as part of the Australian Unity model, they participate in a formal induction program, spanning XPLAN, compliance along with investment policies and procedures.

“In a given year, we probably turn away almost as many as we take on. The cultural fit and values alignment is always important to us, and at Australian Unity as well, they have always doing the same things,” Harding-Davis says.

Once planners are inside the organisation, the compliance system continues on an ongoing basis. At a most basic level, Statements of Advice are regularly vetted, with these readily accessible from those practices using XPLAN.

“There’s a variety of phone calls and face-to-face contacts, for training or random visits,” he says, emphasising the above measures are the standard procedure for all advisers across the business. “We would go further if we found any issues.”

Glenn Freeman is a senior journalist for Professional Planner. He has around three years’ experience in financial services journalism, having also covered broader areas of business including M&A activity and energy. His journalistic experience includes five years spent abroad, where he was editor of an oil and gas title in the United Arab Emirates along with other in-house and freelance projects, which included stints in motorcycle and automotive journalism.
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