Adviser movement is expected to continue in 2020, as displaced and disillusioned practices seek a new home.

While the majority of unhappy advisers are joining larger, privately-owned licensees, a growing number are considering self-licensing for three key reasons.

They believe that self-licensing will deliver:

  1. Freedom to put the client’s best interests first;
  2. Control over advice and business processes; and
  3. Avoidance of hefty dealer fees.

In short, advisers want to run their business their way and take control of their future.

But the idealist notion of control is a furphy because in any highly regulated and ultra-competitive industry, no one really has total autonomy over how they operate.

Editor’s note: This is the first in a series of columns Neil will contribute exclusively for Professional Planner in coming months

Advisers can make decisions about practical aspects of their business such as location, marketing and staff. They can shape their value proposition, pricing and service delivery but many decisions are ultimately guided by policy and regulation, not to mention market forces.

For the majority of advisers, their core licensing needs can be satisfied by an experienced, client-centric and profitable licensee.

Self-licensing should be seen as a last resort not the end game because of the significant risk and responsibilities it carries.

Before applying for an AFSL, advisers need to ask themselves the following questions:

  • What problems am I trying to solve?
  • What problems will I create?
  • What will I really be in control of?
  • Is there another option?

There are trade-offs to consider. This article touches on three.

Trade-off 1: Greater control v greater responsibility

Dealer groups are increasingly conservative in their risk appetite.

For practices teetering on the edge of their licensee’s risk tolerance, self-licensing would enable them to customize processes to better reflect their qualifications and experience. They could determine their business’ risk profile including the investment strategies and products they can recommend.