Licensees have found financial success by taking equity stakes in advice firms, developing greater service offerings and moving to variable fee structures, but the 2025 Professional Planner Licensee Summit heard the business of licensing still needs to become more attractive.
Count chief executive Hugh Humprey told the Summit licensees aren’t remunerated enough for the risk they take on. “That is an absolute fact,” he said.
Humphrey said Count’s licensing is profitable but a 12 per cent to 15 per cent profit margin isn’t appropriate for the level of risk.
“We increase fees a little, that’s difficult but people are a bit more accepting of that these days and they see the value,” Humphrey said.
“Growing margin and making sure we’re profitable [means] when things go wrong, and they do all the time, we’re strong enough to be able to put them right.”
The future of licensees – or “advice networks”, as they have reframed themselves – is not just through licensing but also offering services to advisers in their network and self-licensed advisers.
But the opening session of the summit heard how licensees have shifted their proposition to focus on having the right advisers, rather than more of them, in part to help mitigate risk.
“I’ve never been a fan of the adviser number stuff,” Humphrey said.
“When I was in [the] telco [industry] you had to have as many stores as you could and if Telstra opened a store you had to open one next door and then everyone realise that’s really expensive and they don’t all perform the same way…and I think the same thing with ARs [authorised representatives].
“It’s wrong to just look at AR numbers…not all advisers are created equal and that’s absolutely true.”
Humphrey points to the Merit licensee acquired from Diverger which is mostly made up of accounts doing SMSF advice, even though they are registered on the ASIC Financial Advisers Register and count the same towards total AR numbers as a holistic adviser.
Instead, Count’s licensing model is focused on revenue so there is an aligned objective around practice growth.
“We can charge an AR fee as well,” Humphrey said. “Some players in the industry won’t charge for an additional AR so you get these big AR numbers, I don’t think that helps anything.
“It adds risk, complexity and it adds to reporting other things. We look at how many firms we work with, how much revenue they’re generating, how many clients they’re working with and how we can improve the productivity of those businesses.”
‘Well undercooked’
Rhombus Advisory practice management director Peter Ornsby said the behavioural element of managing advisers within a network is “well undercooked”.
“The reason I say that is we have a network where everyone is on the same system,” Ornsby said, where every adviser uses the same customer relationship manager systems, advice documentations, every client is on a fixed term agreement.
“But when you sit down with the advisers and have a look at their behaviours within the business, the way they interact with others, it becomes really clear there are just a cohort of people that are willing to work more efficiently than their peers to drive better outcomes for themselves,” Ornsby said.
“A lot of those outcomes are financial – many of them client as well – but we’ve got a couple of dozen practices where you walk in there and the culture of collaboration is very evident, but the people are working hard.
“They’re seeing 200 clients and they’re running a good business, but the challenge for us is that we deal with the independent financial adviser space. These people are small business and they’re all going to want something different.”
In addition to its acquisition of Diverger, Count acquired Affinia from insurance company TAL, which Humphrey said required a bigger cultural recalibration as Count and Diverger were already closer in terms of business style.
Count also needed to double to licensing fees charged to Affinia advisers, noting much of the business was being cross-subsidised by the insurer.
Humphrey said those advisers were offered a pathway to Count Financial, the licensee owned by Count, and put on a pathway to change those fees.
“We knew there would be attrition as a result of that,” Humphrey said.
“The fees were unsustainably low and I think maybe 15 per cent to 20 per cent of those advisers we expected would move on, particularly the smaller ones who had big fee increases, and that’s what happened.
“[It was] just a different service proposition than what they were used to in the insurer and there was an acceptance they had been cross-subsidised by the business and it needed to change.”
Half of Count’s earnings comes from equity partnerships in planning and accounting businesses; a quarter comes from wealth, which is licensing and SMAs; and a quarter from services.
“The last three years have been about trying to integrate the business, create a scaled business, or, simply put, get a bit of size on us,” Humphrey said.
“We always said we were too small to be listed, and we were really focused on growing our earnings to actually earn our place on the exchange.”
While Count has come to rely on its managed account proposition for revenue, Humphrey said he was “sceptical” about the separately managed account service run by GPS Wealth it had acquired via Diverger.
“When we were acquiring Diverger I thought probably would be part of the business we wouldn’t take over,” Humphrey said.
“I hadn’t fully appreciated it’s a goals-based advice philosophy with proprietary technology. The firms that use that are so much more productive and efficient. Their profit margins at an EBITDA level aren’t 30 per cent, they’re around 50 per cent.”
Art versus science
MBS Insurance partner and co-CEO Kris Mason leads a self-licensed risk specialist business with 36 ARs. The firm has grown on the back of strong referral partnerships in the industry with holistic advice firms that require a specialist to handle life insurance.
Mason said there is no exact science behind how big the business needs to be.
“A lot of our growth has been driven by opportunities that come across,” Mason said.
“Our plan internally is to double within the next five years which would mean we’re probably going to be 70 to 80 advisers, all risk specialised.”
However, Mason said the firm is conscious about “staying in our lane” and there is no appetite in advising in products outside the insurance market.
“A lot of the distribution drop is just planners aren’t interested in insurance,” Mason said.
“It’s got a bit more specialised, a bit more product complexity with old IP [income protection], new IP, but the need for insurance work at the moment is through the roof. You’ve got premium volatility like we’ve never seen before.”
But while MBS is primed for growth under its own AFSL, CoreData Research global CEO Andrew Inwood said the advisers who are authorised by third-party licensees are growing more than those who are self-licensed.
Inwood earlier presented to the summit the four key services advisers rely on licensees to deliver the most: compliance, revenue, education and training, and approved product lists.
“When they’re being done well, they’re being done well by a licensee and they’re leaning into it and taking responsibility for it,” Inwood said.
“If you’re with a licensee and something breaks, something goes bad and you ring up and say mistakes were made, we’ve had a server breach…someone from the licensee is going to turn up and they’re going to have a system and process for fixing it and helping you through the process and manage it.”
However, Inwood said there was still a group of people who don’t want or believe they don’t need to pay for that level of service.
“The people who are with licensees do those extremely well and the license should be able to charge for that,” he said. “The fact that it’s not valued is a cognitive problem inside the industry.”
