Since the early 2000s when Financial Services Reform (FSR) introduced the concept of the Australian financial services licence (AFSL), licensees and advice businesses have generally developed as separate entities. Advice businesses provide advice to individual clients and manage ongoing relationships, while licensees provide licensing and other services to advice firms.
But Fortnum Financial Group managing director Neil Younger says that is going to change as licensees redefine how they support advisers to drive down costs, and deliver high-quality, affordable advice.
Advice and licensing co-exist in a single structure in self-licensed firms, and Younger says the same merging of advice and licensing is inevitable right across the industry as the drive gathers pace to separate product from advice and to remove the cross-subsidisation of licensee services.
Younger says the continued survival of the licensee business depends on supporting advisers to form new kinds of collectives where advice and licensing merge, helping them grow profit margins from delivering advice, and sharing in those margins.
“It may be quicker than that as the institutions exit out [of licensing] and you start to see potentially new scale players outside of the distribution models,” he says. Fortnum is laying the groundwork for the transition now