The institutional exit from licensing services may be history but the legacy remains.

The banks created a false market for licensing services, offering solutions like technical support, technology and education and training for a fraction of the cost in a bid to attract platform funds under administration (FUA) and satisfy their product master.

Backed by the deep pockets and shared services of their parents and siblings, bank-owned licensees allowed the growing costs of effectively operating to be covered by other verticals and hung around just long enough to distort prices before shutting shop.

Problematically for the licensees that remain, and for the financial services industry more broadly, the price point set during this era became an anchor for advice businesses, despite clearly being unsustainable.

A consequence of this is an industry that has significantly reduced the capacity of businesses to invest in people and services for the betterment of clients. The banks failed to innovate and that trend must not continue, if the industry is to thrive.

At the Professional Planner Licensee Summit in June, the sustainability of licensees was a key theme.

Are licensees being adequately compensated for the value they add and the risk they take on?

This is a critical question, given the central and essential role licensees play.

For the majority of advice businesses, their ability to operate depends on external service providers, particularly their licensee.

It is in their best interest and, therefore, the best interest of their clients that licensees are profitable and successful so they are around for the long term to serve their needs.

The abrupt and careless way the banks abandoned advisers during and after the Hayne royal commission highlighted the perils of choosing a licensee that doesn’t make money from licensing services. It was too easy for the banks to walk away.

The ongoing separation of product and advice and the industry’s journey to professionalism is challenging advisers to see service providers as business partners.

These factors have created an opportunity for the industry to look at the entire financial services eco-system and consider the sustainability of each component part and the sustainability of the eco-system as a whole. If each component part including asset management, life insurance, platform administration and licensing are not sustainable propositions, the future of the entire eco-system is under threat.

There are no shortcuts to the solution either.