The spectacular break down of the financial services value chain is gathering steam, and the demolition will be extensively completed in the next 12 months (although a few outliers will remain).

The end result will be profitable standalone advisory businesses, profitable standalone licensees and a strong, emerging profession. Products and platforms will compete on merit in an open market. Goodbye Approved Product Lists (APLs).

Like any relationship break-up, this separation creates a new set of challenges that need to be worked through.

Advisers will still need robust systems, processes and oversight plus services like technical support, product research and technology but these have traditionally been provided by loss-making licensees. They will need to carefully reassemble the value chain.

In doing so, advisers and licensees must be careful not to make the same mistakes as the vertically-integrated institutions, which created vehicles to capture margin. They must be aligned on commercial objectives.

They must keep their operations focused on a value chain that begins at the advice end. Whichever component parts they choose to build, buy or rent must be strictly for the benefit of clients. These horizontal partnerships must enable the delivery of high quality advice.

In reconstructing the value chain, licensees and advisers have a unique opportunity to put the client in their rightful place at the centre of everything they do. If everything they do comes back to, “What’s best for the client?” then there can’t be a pre-determined outcome. The right advice will be personal and bespoke.

The prevailing question on everyone’s mind is: what is the best model for a fruitful, sustainable long-term future?

From a licensee’s perspective, the discussion revolves around cost and scale. Regulatory certainty is also critically important because it will help with managing risk.


Making professional advice more affordable and accessible is a key focus for the regulator, but advice fees are on the rise for a myriad of reasons. For example, advice today is generally more comprehensive and more valuable. Hence, advisers are more confident asking to be adequately remunerated. Capacity and reduced supply is another major factor.

Then there’s the rising cost of delivering advice, due largely to higher licensing and compliance costs including PI insurance premiums.

Some argue that these are artificial costs are imposed by licensees, but governance, supervision and monitoring obligations are a legal requirements. They apply whether an adviser operates under their own AFSL or somebody else’s. The main role of a licensee is to interpret and synthesize the various, applicable laws; set standards and put appropriate systems and processes in place; and ensure advisers meet their obligations.

The hefty associated costs are not new. They have always existed only now they are not being subsidised by manufacturers.