Advisers’ inherent tribalism could be one of the elements yet to emerge in the wealth and advice industry’s discussion about self-licensing and the evolution of the licensee model, GPS Wealth managing director Grahame Evans says.
“Advisers, when they’re talking about a dealer group, will take pride in their association with other advisers. Often they’re not talking so much about the licensee or the business, it’s about the tribalism and the relationships that tie them into that,” Evans said during a discussion at the Professional Planner Licensee Summit in June.
Evans joined Securitor managing director Mark Fisher and Paragem managing director Ian Knox on a panel at the summit to discuss the changing role of licensees amid structural reform now under consideration.
Self-licensing has become a popular avenue for advisers who, in recent years, have been turning their backs on large banded institutionally owned networks as public pressure on the vertically-integrated model has intensified.
All of the five largest advice networks in the country have experienced a decline in adviser numbers in the last two years, while the second tier of licensees have all had an explosion of adviser numbers.
Meanwhile, more than 500 new self-licensed businesses have popped up in the last two years, 488 of these have fewer than 10 registered advisers, research collated for Professional Planner by Adviser Ratings has shown.
While Evans said he believed the self-licensing trend would continue, he also noted that the belonging advisers find by grouping together still needs to be taken into account.
“We need to think about this aspect of belonging,” he commented. “My gut is saying that a lot of advisers end up staying with their licensees for this reason. In many cases, the licensee status is irrelevant to them, they will stay in that tribe. We shouldn’t forget that as we evolve the model.”
The move towards self-licensing or smaller independent licenses will continue to be viable as long as the industry collaborates in areas not competitively important, Evans continued.
“As an industry, we don’t collaborate very well at all,” he said. “But we should be collaborating on everything other than what’s competitively important to us.”
Regtech, in particular, is an area the industry should be collaborating on, Evans said.
“I think it’s possible to get there [efficient self-licensing] and I think it will be a better world once we get there,” he said.
In this new world, licensees will differentiate themselves based on the extent to which they can help advisers build their businesses by improving engagement with clients, Evans said.