ASX-listed licensee CentrePoint Alliance has posted strong figures in its FY220 business results including a 6 percent increase in its licensed adviser base, despite implementing a new adviser fee model that saw prices jump 89 per cent on July 1 this year.
The new adviser fee model, which was predicated on the abandonment of product subsidies and saw the average price for AR licensing jump from $19,000 in FY19 to $36,000 from July 1, 2020, is a litmus test for licensees looking to run a model free of conflicted remuneration.
According to Centrepoint’s report to the ASX, delivered on August 20, 79 new advisers from 49 firms joined the licence in FY20 to bring the total to 317. Combined with the 83 per cent of advisers who stuck around for the price increase, Centrepoint had a 6 per cent increase in adviser numbers in a market that has contracted 13 per cent over the last 12 months.
The figures reveal an increasing willingness for advisers to embrace transparent, subsidy-free licensing.
The transformation has come at a cost, however; the 17 per cent of advisers that left the dealer group likely did so because they could not afford the increase. The departing adviser average revenue is $159,000 while Centrepoint report that retained and new adviser average revenue is $318,000.
For Centrepoint, the shift in average adviser revenue also came with a reported 30 per cent in adviser audit process efficiency – though it is unclear what metrics were employed here.
Consistent with the theme of transparency, the dealer group shared the results of an independent survey of its adviser base revealing its strengths and weaknesses. While 94 per cent of advisers agreed that Centrepoint are ‘professional’ and ‘transparent’, only 62 per cent believed the licensee has a ‘good industry reputation’ and only 56 per cent would call it a ‘genuine partner’.
According to Centrepoint’s Chairman, Alan Fisher, the flow of advisers during a contracting market is especially positive.
“The need for quality financial advice has never been more pressing, and we were pleased to recruit record numbers of new, quality financial advisers in FY20,” Fisher said.
The group’s CEO, Angus Benbow, said the market disruption – which includes both the effects of the pandemic and the adviser exodus due to regulatory upheaval – has provided an opportunity.
“The conditions of our operating environment have presented challenges which are significant, but I am pleased to report that these same conditions have provided opportunities for us to demonstrate value to our adviser community,” Benbow added.
