The growth of licensee businesses is rapidly becoming less dependent on the simple metric of how many advisers or practices they can attract to their networks, and more dependent on a complex interplay of factors that define the growth prospects of individual practices.

CoreData Research founder and global CEO Andrew Inwood told the Professional Planner Licensee Summit in June that licensees which recognise the support and services needed by the practices with the greatest growth potential will prosper.

A growing recognition the sustainability of a licensee is linked to the growth potential of advice practices, not to the number of advisers per se, is one of the reasons more licensees are seeking to participate in the advice margin by acquiring equity stakes in advice businesses or are moving to variable fees linked to the growth of the business.

Inwood said issues such as revenue payments and compliance support remain high on the list of the services all advice practices need, but an indicator of likely future growth is emerging in the form of technology adoption.

This is a finding emerging from CoreData’s annual Licensee Research, which remains open for advisers to complete and to contribute their insights and experiences with licensee services.

Inwood said the message for licensees is clear. “If you can lead on compliance and tech, you’re going to attract the growth partners,” he said.

“And if you want to be serious about the future of this, then you have to be really strong in this space.

He added for licensees have to be serious about the future of compliance and tech to be strong in this space.

“This is the conversation about growth: tech is going to be about taking the work away and making the systems better,” he said.

“There is a strong belief inside Australia at the moment that we have under-invested in tech, that people around the world, particularly in the US and the UK, are further down that line than us and there is some evidence that that is true.”

Coredata’s research shows that about half of financial advisers have experienced an increase in the fees they pay to their licensees over the past 12 months. In three in 10 cases they’re paying more simply because the licensee has jacked up its fee.

But in about roughly half of those cases (14 per cent), the amount paid by advisers has increased because the core licensee fee has been raised and they’re also paying for additional services.

In roughly half as many cases again (6 per cent), the amount paid has gone up because advisers are paying for additional services, even though the core licensee fee hasn’t changed.

Inwood said that irrespective of whether a licensee is large or small, institutionally owned or not, “the question now isn’t how many people you’ve got in your business, but of those who actually have growth plans?”