Where will you be in 2025?

Date: 07 January 2019

As you consider your future as a financial adviser, you’ll need to decide whether you will obtain or maintain your own Australian Financial Services Licence (AFSL), remain with your current AFSL-holding dealer group as an authorised representative, or join a new dealer group.

If you decide on the last course of action, you will need to carefully consider a range of criteria in terms of what’s important to you in a new, compatible dealer group ‘home’.

Key criteria

These criteria are likely to include:

  • Cultural compatibility (including business model fit, value proposition, professional values, philosophical alignment and personal preferences)
  • Reputation (ensuring you are not tainted by the stigma of a licensee that the market views negatively)
  • Product list management (especially in terms of flexibility in the range of financial products you are able to recommend to clients)
  • Business management support (including practice management, marketing, compliance, research and technology)
  • Scale (which can deliver favourable pricing for things such as administration and technology)
  • Professional indemnity (cover and costs)
  • Terms and conditions of the proposed adviser agreement (particularly in terms of any termination clauses)
  • Long-term ‘ownership’ of client accounts (i.e. who ‘owns’ the client account on termination of the agreement)
  • Process for remitting revenues owed to you (i.e. speed, simplicity and documentation)

The one thing most commentators agree on is that price should not be a primary consideration. If the price is low, it’s often because the licensee is being subsidised by a product manufacturer or is reducing service delivery standards to you and to clients.

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Identifying your business needs

GPS Wealth managing director Grahame Evans believes the first thing any adviser should do, when considering a move to a different dealer group, is to identify all their own business needs.

“I would ask them to consider what is important to them,” Evans says. “Where are they going? What will their business look like in 2025? What do they want it to look like?

“They can then work out what strategies will be required to take them there and they can develop a ‘fit’ matrix in terms of what they need from a licensee.”

Futuro Financial Services executive chairman Dennis Bashford suggests advisers should then do as much research as possible on each licensee they are considering and the support each licensee promises.

“An adviser shouldn’t take the AFSL’s word for it,” Bashford says. “They need to go out and talk, not just to people recommended by the dealer, but to people in that dealership they pick at random. Go and talk to them, and see how well the services are delivered, and where expectations are actually met.

“Also, advisers need to be patient in making their selection. It might be a six-month process.”

Once you have done all the required research and have given sufficient attention to all the criteria outlined in this guide, you’ll be in the best position possible to commence negotiations.

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 expands on the different criteria for making your selection. It also includes an explanation of why price is the least important factor to consider.