Advice / APAC / Asset management / Consumers/retail

2022 Licensee Research: Changes and opportunities in distribution

The financial advice landscape continues to change, and as it does, it presents new challenges and opportunities for organisations that rely on financial advisers to get products and services to market.

CoreData’s Licensee Research looks closely at the relationships between advisers and licensees, and in 2022 and there’s a couple of key findings to focus on.

The first one is advisers’ capacity to take on new clients; and the second one is how well licensees are supporting advisers to grow their businesses.

The Licensee Research has found that irrespective of the size of an adviser’s business – whether it’s a Micro, Small, Medium or Large practice – each adviser has around 150 clients.

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This is bang on what’s known as Dunbar’s Number, which describes the number of meaningful relationships an individual can sustain. And it means most advisers are close to – if they’re not already at – capacity.

Clearly, product manufacturers who rely on advisers to get their products to market can’t rely on waves of new investors entering advisers’ spheres of influence. 

Add to that the fact that adviser numbers are falling – from around 28,000 at the peak a few years ago to around 16,000 or 17,000 today – and it’s clear that a strategy relying purely on advisers for distribution is looking like a dead-end street. 

That’s why we’re seeing more product manufacturers starting to think about direct-to-consumer distribution options – but that’s a discussion for another day.

The second thing to talk about now, is advisers also need to think about developing new revenue streams for their businesses and to explore other avenues for growth. They could use some support 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. 

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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.

That’s a gap in the market, and it’s one that forward-thinking product manufacturers and service providers are thinking about how to exploit. There’s a clear opportunity to develop better relationships with advisers by helping them to run great businesses, not just deliver great advice.

The CoreData Licensee Research looks at many more aspects of the adviser-licensee relationship, and if you’d like to know more about the research and what it means, please do not hesitate to get in touch.

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