Financial Planning

Licensees carry costs for self-licensed advisers

licensees costs self-licensed

Self-licensed advisers are being subsidised for compliance developments by large licensees which do the heavy lifting in these areas.

Licensees for mid to large-tier financial advice firms are carrying the back-office and compliance costs for the growing cohort of self-licensed advisers who can opt out of those systems, the head of a mid-sized group has claimed.

Matrix Planning Solutions chief executive Allison Dummett said an unlevel playing field was developing between licensees who had committed resources to developing systems for advisory business and advisers who held their own licence.

“We have invested in creating systems, technology, efficiencies and infrastructure that licensees have needed to satisfy the regulator and we make that available and we let others leverage that,” Dummett said.

“However, the sector also has people who for their own reasons have decided they want to be self-licensed and don’t want to access those services and that is the unlevel playing field.

“In that scenario, we have a thing called capital keel, and as a licensee we feel strongly that we need to be well placed to invest in our people, technology and services we provide and to be there for the future, and you can start to see the erosion of that keel with the shift to individual licensing.”

Her comments were made today at the Association of Financial Advisers virtual national conference, Vision 2020, as part of a licensee panel discussion where the moderator noted the number of self-licensed advisers was around 3770, or 15 per cent of the advice sector, and more difficult to regulate when compared to advisers under a single licensee.

“The role licensees play, in what is still an emerging profession, is immense because we have been at the vanguard of developing all the processes and systems to allow people to operate in the complex environment we have,” Dummett said.

“That role is important because if that does not exist, or it gets eroded, more clients will have to go direct to government services if they have questions on things such as their superannuation.

“We don’t want that to happen, but want to sustain a licensee model where we give  a framework of support, services, guidance and community to our advisers, and that is a strong, healthy place for us to be for the end client.”

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