Adviser Connect - Advisers Wanting to Switch Licensees?

In October this year Adviser Ratings launched Adviser Connect, a service seeking to assist advisers looking to switch licensee find a dealer group which best suits their needs.

Our Managing Director, Angus Woods, “The reason for creating Adviser Connect is part due to the demand from the market, but also to help advisers to distinguish from the less-than-wholesome licensees. If a licensee closes down either due to pressure from the regulator or from general mismanagement, advisers need to be aware of the consequences for themselves and their clients.”

Reflecting on some of the statistics

Last year, 2,680 individual advisers, or around 13% of the active advice market moved to a new licensee (this figure does not take into account the influx of newly licensed accountants “joining” the industry – but rather those who already had a licensee, then changed to a new one). Looking more closely at the data indicates the last four years has seen a substantial increase of existing advisers opting to find a new licensee. In fact, the last four years has seen an increase in adviser movements of over 150%.

 

 

Data supplied by Adviser Ratings, Adviser Connect Service

 

Some of the key things that are driving these movements?

Dissatisfaction

There are both push and pull factors involved. There are 1,600 licensees operating in advice, a number that has grown recently with a tendency for more advisers to become self-licensed. On the surface, this would indicate that an increasing number of advisers are finding the idea of self-licensing, which gives greater control over products lines attractive. It’s also an indicator of the increasing dissatisfaction with the offerings of many of the current licensees in the marketplace.

There would seem to be a great opportunity in this environment for licensees that wish to grow to take heed of these trends.

Competition

There are 165 licensees that have 20 or more advisers under their banner. Each of these licensees will be in different stages of their growth and development, offering different services and propositions to retain and win advisers. In our dealing with various licensees, we are seeing an inclination for heavy investment in technology and compliance, yet a reduction in practice support.

What Advisers are telling us they want…

Our team have been in constant dialogue with advisers and we recently conducted a survey to see what the key reasons were behind the motivation to change licensee.

Top of the list was to do with alignment, not being aligned with a major institution and also having access to an open APL with multiple superannuation, investment platforms and insurance products that gives choice to clients available.

The next most important reasons for switching was the provision of simplified advice production and a client friendly SOA. It would seem that what goes into the key advice document and how this ends up being presented to the client has a lot of advisers frustrated. Any licensee that can make this process simplified and the end product client friendly would be well on their way to attracting new advisers.

Advisers also indicated that among the key reasons for switching licensee was to move to a licensee that embraced the idea of the virtual/digital advice business that concurrently valued education training and compliance support.

The numbers of advisers transitioning to alternative licensees means there is opportunity for licensees who want to capitalise on the disparity of value propositions in the market. The message for licensees is clear. Advisers have never been more willing to switch - if you have a strong value proposition and you are looking to grow your network, you will be in a better position to capture some of the many disaffected advisers out there who are unhappy with their current licensing situation.

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Article by:

Rudi Loggenberg

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