Blunt warning issued over licence push

Many accountants were not rushing to be licensed despite the looming deadline, however, there was an aggressive marketing campaign by licensees to gain accountants under their respective dealer groups, according to an industry executive.

Connect Financial Service Brokers chief executive Paul Tynan said in the current highly charged environment, accountants needed to be very careful when selecting a licensee as their future business opportunities and retirement, exit and succession objectives could be put at risk if the wrong one was selected.

“Some licensee agreements have very strict client ownership stipulations, especially those by licensees that operate within the big four major banks, AMP and IOOF,” Tynan said.

He revealed a number of accountants had approached Connect for an independent assessment of prospective offers, where many were shocked to learn of such client ownership requirements, as well as arrangements where the adviser might own the revenue stream but could not sell their clients outside the licensee group.

For accountants who valued independence as the key platform of their client service and advice offering, great care needed to be exercised when assessing and selecting a licensee agreement, he added.

He also dispelled one of the advice industry’s biggest myths, which had been perpetuated over the past 30 years, that it was hard and expensive to obtain and maintain an Australian financial services licence (AFSL).

Accountants needed to tread cautiously, consider all offers very carefully, seek expert advice, undertake comprehensive due diligence and, most importantly, consider the best AFSL framework that maximised the potential value of the practice in line with the principal’s succession and exit aspirations, he said.

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