In the wake of FOFA (Future of Financial Advice) reforms, and now the repercussions of a global pandemic, it’s no surprise many financial advisers are thinking deeply about the future of their business. All this change can be a catalyst for new models – one aspect of which is who you partner with as a licensee.
Of course, some advisers have already had licensee change thrust upon them.
“A major driver is ‘WEXIT’ – some banks have chosen to exit the wealth industry and taken their licensing options with them,” says John Sullivan, Head of Client Development with Macquarie's Virtual Adviser Network (VAN). Given a license is an adviser’s ticket to operate, many are questioning whether they want to be that dependent on the decisions of a third party.
“We encourage all our clients, if they don’t have their own licence, to have a ‘break glass in case of emergency’ plan – what they should do if their current licensing arrangements suddenly fell over. It’s just good business risk management,” John says.
Is it time to make a change?
Whether your current arrangement is ticking all the boxes or you have some doubts, it’s good time to take stock of the options available to you.
A licensee ‘plan B’ begins with a good understanding of what is currently working (and not working) for your business. In a 2019 webinar on licensing options with Macquarie, Encore Advisory’s Tom Reddacliff suggested taking the same approach as you would with advising clients in a turbulent market. “There’s so much noise at the moment, so get back to basics and say, ‘What’s the business I’m trying to build? What does it mean for me personally?’”
As the managing director of a licensing and advice consulting firm, he is open to discussing all options. “Sometimes you might be better off staying where you are until you’ve worked out exactly what you want to do.”
If your business goals include having more control – and if your current licensee model feels constraining – then it may be time to consider alternatives.