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The value of a licensee: Have your say

This article originally appeared on Professional Planner. Click the image to read the full article.

There’s probably never been a more important time for financial advisers to truly believe that their chosen licensee is a genuine partner to them in running their business and servicing their clients.

In an environment that is fast-moving, seemingly ever-changing and throwing up new challenges (or wrapping advisers ever-tighter in red tape), having a good partner to help navigate the choppy waters is crucial.

As we see more advisers leaving large, institutionally owned licensee groups and striking out for smaller licensees, CoreData is starting to receive more inquiries from advisers about the suitability, resourcing and quality of management of the adviser’s shortlisted licensees.

It’s not up to us to tell an adviser which licensees they should consider or avoid. But we do have some insights into how advisers already authorised by those licensees perceive the support provided by their licensee. Those insights come from our annual Licensee Research, and while we collect data for individual licensees, which we don’t disclose publicly, we can share with you the top-level results from our 2020 research.

This year’s research is now open, the findings of which will form the basis of Professional Planner’s annual Licensee Owner’s List which will publish in June. Readers are invited to take part in the research to contribute views and describe experiences of licensees over the past 12 months. It involves an online survey* that can take up to 20 minutes to complete.

Loyalty measured

In 2020 most advisers reported being fairly satisfied that their licensee is committed to the industry. Whether their licensee is committed to its own future or to their future as advisers and business owners is a separate point; when we ask whether advisers believe their licensee acts in its own interests or in the interests of advisers and clients we get a mixed response, and indeed, only around half of advisers overall say the licensee is focused on their needs. Nevertheless, overall around three-quarters of advisers say they remain loyal to their licensee.

On the other hand, this means about a quarter of advisers are not loyal and may be up for a move in the future, near-term or further down the track. Either way, it’s a potentially troubling figure and if we consider that advisers in own-AFSL firms were excluded from the research, we could still be talking about as many as 4000 advisers feeling disloyal to their current licensee.

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Almost six in 10 advisers across the industry, including almost three-quarters of advisers in independently owned licensees, say they feel valued as an adviser within their licensee. But even so, fewer than half of advisers overall believe their licensee is an effective partner in helping them to grow their business. Even advisers in independently owned licensees – who typically exhibit greater satisfaction than other advisers with almost all aspects of their licensee – the figure still doesn’t reach six in 10.

Satisfaction not guaranteed

It’s instructive to think about this set of results within the broader context of the licensee research. Satisfaction with licensees on their status as partners in advisers’ businesses and being focused on their advisers’ needs is well below advisers’ overall satisfaction with the support provided to them by licensees.

Overall satisfaction with licensee support rebounded in 2020, after taking a big dip in 2019. It hasn’t returned to levels we saw in 2018, but it’s on its way – and the 2021 Licensee Research will show us where the number settles this year.

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Overall satisfaction with the support provided by licensees was 58.5 per cent – that is, 58.5 per cent of advisers rated their satisfaction with licensee support as seven or higher on a scale from one to 10 (with 10 being the highest satisfaction).

Independently owned licensees had the highest support satisfaction score (73.3 per cent), while institutionally affiliated licensees had a satisfaction score of 58.5 per cent. Institutionally branded licensees scored worst, at 2.4 per cent – but that’s not a huge surprise given the disruption experienced by advisers in institutional networks.

Financial advisers have experienced tough conditions over the past 12 months, but the support of a competent, well-resourced and committed licensee has helped some weather the storm better than others. If you’ve got 20 minutes to tell us how yours has supported you, be it well or poorly, we’d love to hear about your experience.

PLEASE NOTE: The 2021 CoreData Licensee research is not designed for own-AFSL or self-licensed advice firms. A separate piece of research covering own-AFSL firms is being prepared. If you’d like to take part in that research please leave your details below.

*Completion of the 2021 Licensee Research entitles advisers to opt in to redeem three entries in a prize draw for the chance to win a $1000 Eftpos card, one of four $250 GiftPay gift cards or one of five $100 GiftPay gift cards. All survey responses are strictly confidential. Read the terms and conditions here. Click here for further details on CoreData’s privacy policy.

Own-AFSL financial advice firms

If you wish to be included in an upcoming survey of the issues and conditions facing own-AFSL financial planning firms, please provide your contact details below.

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