Cultural compatibility is key when choosing a new dealer group

Date: 13 December 2018

If you, as a financial adviser, do not obtain your own Australian Financial Services Licence (AFSL), you need to find an AFSL-holding dealer group to join as an authorised representative.

A key criterion to consider, when deciding which dealer group to join, is cultural compatibility.

The licensee you select should understand you and your business, and be willing to support your efforts to operate a sustainable financial advice practice that provides outstanding service to your clients. This can only happen if you, the dealer group principals and the group’s other advisers all share similar objectives, values and philosophical perspectives.


Business compatibility

To begin, we suggest assessing business compatibility in terms of products, market positioning and the types of clients you serve.

Neil Younger, managing director and Group CEO at Fortnum Private Wealth, says this requires asking yourself specific questions such as:

  • What’s my business model and is that business model supported by the licensee?
  • Do I want to run a business using managed accounts?
  • Am I looking for a managed discretionary account service capability?
  • Am I dealing with high net worth clients where I need certain types of investment solutions available to those clients?

“You start, first and foremost, with what support your business really needs, and that helps you categorise which licensees are able to do that.”


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Aligned outlooks

Once you have addressed such business-related questions, it’s time to delve deeper into questions of personal and cultural compatibility.

“The second layer is around cultural fit and philosophical alignment,” Younger suggests. “What’s the licensee’s proposition really about? What types of advisers are in that license today and do I fit? If I’m a risk specialist and the whole licensee group is full of investments specialists, I’m not really going to fit. Do I fit that licensee in terms of the types of people there – because licensee businesses bring together a community or collaborative culture?”

When you’re developing your shortlist of dealer group candidates, it’s worth first listing your personal preferences and the cultural attributes of your business. For example, is your general outlook conservative or forward-thinking and innovative? Which do you value more – autonomy or sharing? Do you prefer your practice to be a high-tech or low-tech enterprise? Do you lean more towards radical transparency or polite discretion?

If your business is innovative, high-tech and radically transparent, you’re unlikely to find a happy professional home in a dealer group that has a conservative, low-tech, reserved approach to business and communication.

GPS Wealth managing director Grahame Evans believes personal compatibility is at least as important, if not more so, than business considerations.

“I prioritise cultural fit as number one, from the perspective of the type of person the adviser is,” Evans says. “They need to fit with the values, beliefs and approach of the licensee and the majority of advisers in the group.

“For instance, if you were somebody who just wanted to be left alone, you wouldn’t do very well at my firm, because we are highly inclusive and thrive on people sharing information and knowledge and helping each other.“

More on choosing the right dealer group

If you’d like to find out more about criteria for choosing a new dealer group, Netwealth has developed a guide for financial advisers on ‘How to choose the right dealer group’.

This guide will explain why price is the least important factor to consider. It will help you appreciate the significance of reputation when considering which dealer group is best for you. It will also assist you in choosing the dealer group with the right approved product list and business management services for your practice.