Advice / APAC / Licensees

2022 Licensee Research: Challenges and opportunities for licensees

It goes without saying that it’s a challenging time to be a licensee.

The cost of delivering high quality services is rising.

The pool of available advisers is drying up.

And the capacity of advisers to pay more for the services they receive is beginning to diminish.

CoreData’s new Licensee Research puts the spotlight on the relationships between advisers and their licensees, and it identifies a clear and emerging issue.

The size of an advice practice doesn’t matter – whether it’s Micro, Small, Medium or Large – each adviser has about 150 clients. 

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And it turns out that’s very close to a figure known as Dunbar’s Number, which describes the maximum number of close relationships that human beings can sustain.

This suggests most advisers are at – or are at least very close to – capacity. Yet consistently around 90 per cent of advisers tell us their main source of revenue growth will be from new clients.

For both those things to be true – for advisers to be looking for new clients, while at the same time being close to capacity – it means their challenge is how to renew their client base. 

They need to move on low-revenue and low-profit clients, and replace them with higher revenue, higher profit clients. 

But they also need to think about developing new revenue streams for their businesses, and exploring other avenues for growth. They could use some help from their licensees to do this, but the Licensee Research suggests they’re simply not getting it.

Overall, only a quarter of advisers tell us that their licensee has carried out any specific actions that have directly contributed to the growth of their business.

And less than half that number – around 11 per cent – say their licensee has helped them to develop new income streams for their business.

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You can see what’s going on from this chart. These are the four elements of a licensee offer that advisers express the least satisfaction with. 

Look closely: they all relate to developing advisers’ businesses, helping them plan for growth, supporting them with marketing, and backing them into acquisitions and succession planning.

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If licensees are truly serious about supporting advisers, retaining the advisers they have and attracting new ones to their networks, then it seems clear they can do better by focusing on helping help advisers run great businesses, and not just deliver great advice.

The Licensee Research reveals much more about the relationships between advisers and their licensees, and if you’d like to know more about the research, how it’s all put together and what it means, please don’t hesitate to get in touch.

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