The level of enquiries from financial planners looking into owning their own Australian financial services licence (AFSL) has risen considerably this year, according to Paragem Dealer Services.
“Enquiries are high as practices are questioning the impact of consolidation on their business. A lot of practices are trying to move towards being fees based and see having their own licence as a way of doing that because they control their own future,” Paragem managing director Ian Knox told InvestorDaily.
“During the first quarter of this year the number of new licence applications proceeding has been lower than the previous year but the level of interest has been higher, so it would suggest to me that once the next wave of consolidation occurs, people will make their moves.”
The range of industry consolidation currently underway would lead to a reactivation of smaller licensees as breakaway groups are formed, Knox said.
“One of the greatest myths in this industry, which is generally put out by the owners of large dealer networks, is that it is too expensive to own your own licence,” he said.
“Any reasonably sized practice generating more than $350,000 a year in gross revenue into their business will probably be financially better off unless they are financially paid by the dealer for back office services.”
Knox said an AFSL could operate and run comfortably on $50,000 a year, which included good support across areas of governance, compliance, software, supervision and monitoring.
“It is absolutely doable, and we’ve experienced a mass increase of interest from advisers who are presently paying between 10-20 per cent of their gross revenue to a dealer and the revenue they’re paying equates to more than the running costs of their own licence.”
