Research

Research: Independent licensees in favour as institutions take a dive

Satisfaction with institutional licensees has taken a dive.

Institutionally branded Australian financial services licensees have experienced a severe downturn in adviser satisfaction in CoreData’s 2019 Licensee Research.

Satisfaction with institutions has taken a beating following the Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry. The licensee industry average NPS has been dragged down by institutions, especially by those institutionally branded licensees who recorded an NPS score more than ten times worse than last year, at -79.5. 

The overall industry is diverging away from institutions. Sentiment towards all licensees was relatively equal a year ago, but has dropped enormously for both institutionally branded and institutionally affiliated licensees. 

Compliance support paramount

Click on chart to enlarge. Source: CoreData Reseach

An alarming proportion of advisers authorised by institutionally branded licensees do not have confidence that their licensee will provide enough support to meet regulatory obligations. 

Fear of consequences from not meeting regulatory standards has grown following the banking royal commission, which highlighted misconduct in established financial institutions. Advisers want support from their licensee to successfully navigate through the regulations.

Independents the shining lights

Click on chart to enlarge. Source: CoreData Research

In the past year, evidence has mounted of a divergence away from the institutions and a trend of advisers moving towards independent licensees. This was the only subsector of the licensee industry that boasted a increased and positive NPS of 17.1. 

Almost all advisers authorised by independent licensees believe their licensee is committed to the advice industry.

Advisers report strong loyalty, a sense of value and a feeling that their needs are being met from advisers authorised by independent licensees. 

The tangible benefits see a greater profit growth for these practices which in turn has a flow on positive impact on the industry. 

Independent licensees the likely destination for advisers

A likely exodus of advisers from the institutions is on the horizon. Independent licensees are becoming more popular and are outperforming their institutional counterparts in almost all aspects. Advisers are far more likely to recommend and remain loyal to an independent licensee.

A potent mix of factors is prompting advisers to reconsider institutional licensees

Institutional advisers feel they are paying more while receiving less from their licensee. A combination of devalued brand names, increasing costs, less overall support and less overall satisfaction has pushed the advisers in the industry to a tipping point.

The value proposition has diminished and there is a trend of advisers moving towards independent licensees, where they could experience increased support and feel more valued in their profession.

Click here to see a summary of the Licensee Industry Report

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