Independent advisers can mitigate advice and compliance risk
Financial services providers typically single out regulation as the biggest challenge facing the industry today. The increasing burden of compliance impacts the small independent adviser more than most. And the burden has grown exponentially since the imp
“The challenges and demands of the financial services environment have significantly increased in recent years,” says Francois Smith, CEO at Masthead Financial Planning. These demands escalate in the smaller financial services practice due to the multiple roles assumed by advisers. As a direct result of these additional responsibilities business owners and key individual spend less time with their clients and more time coping with the pressures of their businesses. Business profitability is under threat from both the revenue (less time to sell) and expense (spiralling operating costs) side! What alternatives do intermediaries have to keep the cost of compliance down and free up more “client facing” time?
Consolidate and conquer
One of the solutions to increased legislation is for smaller stakeholders to merge, thereby ensuring economies of scale. This trend exhibits in Australia where regulation has forced industry-wide consolidation in recent years. Fortunately there are alternatives for small advisers who take pride in their independence. Masthead Financial Planning is a dealer group that offers advisers practical support to ease the regulatory burden and increase their efficiency and profitability. Smith says the dealer group structure is ideal for advisers who would like to operate under a single “master” licence and enjoy protection from risk as well as protection of income streams and client bases. “By joining Masthead Financial Planning, advisers free up time to focus on their clients and deliver suitable financial planning solutions,” he says. The dealer group takes care of many back-office and compliance duties on the adviser’s behalf!
Advisers enjoy numerous benefits by conducting business under a dealer group “umbrella”, including:
· Protection against advice risk
· Business support
· Choice of quality and sustainable product provider offerings with no production targets or “micro” management
· Group professional indemnity cover
· Financial needs analysis tools, together with training
· Customer relationship management software and support
· Compliance assistance in the advice process
· Key Individual responsibilities
· Customised business development support
· Insight to help grow and maximise the capital value of the advisor’s revenue streams
Adding value through successful succession planning
Independent financial advisers dedicate their lives to building profitable and sustainable practices, with the hope of selling their businesses – as going concerns – near retirement. A key component of a practices’ value proposition is succession planning. And that’s where the dealer group structure really helps. Advisers in the Masthead Financial Planning dealer group have access to a facilitated “buy and sell” option and a pool of ready buyers at the time of exit, reckons Smith. The structure is great for the client too – in that there is always an adviser attending to their financial plan.
Will advisers sacrifice their independence by joining a dealer group? “Masthead was launched in 2004 with the sole objective of supporting independent financial advisers,” says Smith. “We have remained true to this goal and are known throughout the industry for providing professional support.” From a client perspective, those seeking financial services can be assured that advisers operating under the Masthead licence uphold Masthead’s values – are qualified, objective and compliant – and strive to deliver quality advice and service.
Rising to the challenge
“The launch of Masthead Financial Planning is our latest response to advisers’ needs for additional support. We believe our dealer group will assist in ensuring that financial advice remains an attractive and viable career option,” says Smith. Smith, previously Masthead’s Head of Valuations and Transitions, has worked in the adviser environment since 1989 and has in-depth knowledge of the financial advice profession.
The dealer group boasts an experienced team and board of directors, selected for their extensive industry experience, sound business acumen and excellent track records. The directors are Ian Middleton, managing director; Laurence Muller; Peter Dempsey, former MD of Masthead; Phil Mnisi, independent non-executive director; and Iain Williamson, the board chairman.
Editor’s thoughts: There are few options available to independent financial advisers struggling with the compliance load. One can appoint additional staff to tackle the numerous administrative roles, merge with a like-minded practice, accept the “carrot” dangled by one of the country’s providers to join their stable – or join a dealer group as proposed in today’s newsletter. Would you go the “dealer group” route – and do you feel your independence is guaranteed within such a structure? Add your comment below, or send it to gareth@fanews.co.za
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