What it costs financial advisers to be authorised by an Australian Financial Services Licensee will increase as the advice industry professionalises and realigns to dealer services in the best interests of customers, according to CoreData’s Simon Hoyle
The cost of delivering advice to consumers can’t be subsidised from products the way it once was, and nor can the cost of providing licensee services to advisers, Hoyle, who is researching the topic now as part of a joint project with Professional Planner.
“Consumers will pay closer to the full cost of services provided by advisers; and advisers will pay closer to the full cost of the services provided by licensees. It’s really quite simple,” Hoyle says.
However, how much is enough to pay in licensee fees, and how much is too much is still a moving target.
“Some licensee charge advisers as little as $20,000 a year; others charge twice as much; and some charge advice practices north of $100,000 a year, depending on how many advisers are in the firm and the services they take up,” he says.
Licensees are emerging with new pricing models to reflect the ‘real cost’ of advice. Some consultants have estimated that unsubsidised authorised representative services can cost licensees between $38,000 and $45,000 per year per adviser.
Cost versus value
“It will be absolutely critical over the next five years to ensure that you are backed by a competent and well-resourced licensee,” Hoyle tells Professional Planner.
“Support and guidance from a high-quality licensee might make the difference between success or failure as new education, professional and ethical standards come into force, and in the wake of the financial services royal commission as consumers increasingly look for non-conflicted advice,” Hoyle notes.
Advisers who want their voice heard relating to the adviser-licensee relationship can respond to the 2019 CoreData Licensee Research online survey. Results from the research will be published in the June issue of Professional Planner and will underpin the ongoing coverage on changes within the industry.
The Licensee Research is an in-depth look at the adviser-licensee relationship, Hoyle explains.
“Its results not only empower advisers to make better decisions about the licensees they choose, but also enable licensees to understand how advisers regard their existing services and support,” he says.
“Each year we ask financial advisers to tell us what they think about the quality of the services provided by their own licensee, and which other licensees they like the look of based on what they know of them.
This year we’re also focusing on the cost of licensee services, and whether those services are perceived as good value and as being relevant.
“If you’re a financial adviser operating in the Australian market, we want to know what you think about your current licensee – how well it supports your business and the way you provide advice to clients, what it could be doing better, and what it already does well. Your participation in this research will help to create a comprehensive and accurate picture of the current licensee landscape.”
The 2019 CoreData Licensee Research online survey takes about 15 minutes to complete and you’ll also be able to go into the draw to win one of four $1000 Flight Centre gift cards, or one of 20 $100 GiftPay online gift cards.