A moveable feast: where advisers will land in 2019

Tahn Sharpe

By

July 3, 2018

In 2019, the top 10 licensee list will look vastly different from the one Professional Planner published in April this year.

While this year’s list of largest advice businesses had the same top six licensee owners as the year before, this will not be replicated in 2019, thanks to proposed bank spin-offs and wealth management disposals.

AMP remains the largest licensee owner in the country – for now – but the fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the banks’ retreat from wealth management have sparked more change at the top end of licensing.

The major moves include:

  • October 2017 – ANZ Bank announces the sale of its superannuation and financial planning businesses to IOOF Holdings for $975 million
  • May 2018 – NAB announces its intention to offload all of the advice businesses under its MLC banner, apart from JBWere
  • June 2018 – Independent licensee group Dover ceases to operate as an Australian Financial Services licensee, prompted by pressure from ASIC
  • June 2018 – Commonwealth Bank announces its intent to demerge its wealth management and mortgage broking businesses into CFS Group, which will include, among other assets, licensees Count Financial and Financial Wisdom.

The breakdown

The ANZ sale shifted five large dealer groups to IOOF – already the 6th-biggest licensee owner – affecting about 1040 advisers. It is expected to make IOOF the second-largest licensee owner in 2019. ANZ will retain its largest licensee, ANZ Financial Planning, whose 379 advisers would leave it at number 10, based on current data.

NAB’s intent to sell, which the bank’s chief customer officer for consumer banking and wealth, Andrew Hagger, revealed to Professional Planner, has not yet come to fruition. The five NAB licensees on the market – JBWere will be retained by the bank to service its high-net-worth clients – now represent 1315 advisers. If these five remain under the umbrella of unified ownership, they should represent the third-largest licensee group in 2019. There is no certainty of this, however, as at least one large licensee group, Godfrey Pembroke, has indicated a preference for independence.

Dover’s collapse was preceded by a shambolic appearance by the firm’s chief executive, Terry McMaster, at the royal commission. Subsequent pressure from ASIC led McMaster to agree to disband the Dover Group, and he emailed 399 advisers to inform them that no new advice could be given under their current arrangements.

CBA’s demerger announcement came across as a concession in many ways. While Count Financial and Financial Wisdom represent a combined 807 advisers, which would make CFS Group the sixth-largest licensee owner, CBA will retain three licensees representing 750 advisers and remain in the top 10 at seventh, based on current data. The bank’s retreat from wealth management is only a half-step at this stage, and there is no indication that either CBA or the new CFA Group will walk away from vertically integrated models.

The bloodletting

The changes are indicative of an industry in the throes of massive upheaval. The bloodletting at the top end, while not without casualties, should serve to flatten out the structure of the licensee industry and make it less top-heavy. The institutions are being supplanted by a burgeoning second tier of large licensee owners, whose own surge is enabling a new breed of mid-sized boutique firms. Beneath them, the self-licensed brigade swells.

It has not come without warning; while the top five licensees remained unchanged from 2017 to 2018, their adviser numbers were down by an average of 13 per cent.

There will be further moves that will shape the licensee space before the 2019 list comes out. The growth of the SMSF Advisers network, which provides scaled licensing solutions to accountants wishing to provide financial advice around self-managed superannuation funds, could lead to it climbing the rankings. The fate of almost 400 ex-Dover advisers could further shake up the list, while the marriage between ANZ and IOOF still needs to be consummated and anything could happen with NAB’s five large licensees.

The list published here merely projects what next year could look like, based on announcements made to date.


TOPICS:   FASEA,  licensees,  royal commission into banking and financial services

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