Financial Standard vol19 n20

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www.financialstandard.com.au

www.financialstandard.com.au 20 January 2020 | Volume 18 Number 01

18 October 2021 | Volume 19 Number 20

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Product showcase:

Executive Appts:

Events:

Allan Gray

JANA, Mercer, Vanguard

ESG Forum

Feature:

Profile:

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Opinion: Toby Bellingham Redpoint IM

Self-licensed cohort grows at speed Karren Vergara

he spike in the number of AFS licences T shows more financial advisers are shunning larger dealer groups to ensure complete control over how advice is delivered. Rainmaker Information analysis of ASIC’s Financial Adviser Register shows there were 19,096 active advisers at August end – a number that continues to decline. Further examination of the database shows that nearly 1700 financial advisers jumped from one practice to another in the year to August, but an even stronger trend emerging is the number of advisers who have applied to the regulator for their own licence as 145 new AFSL applications were successfully registered during the period. Addi House principal and financial adviser Kearsten James says the main driver for going out on her own is to remain an independent financial adviser fundamentally, which meant operating in line with section 923A of the Corporations Act. “Being able to reassure clients that I am unconflicted is important to me,” she says. James is in the early stages of setting up Addi House. In addition to being a financial planner she wears multiple hats as client service manager, paraplanner, licensee compliance manager, business manager, marketer, and bookkeeper. “I went into business for myself so that I could have more control and give advice and service the way that I think is best. Being a part of a dealer group, which then controls how you deliver advice, just didn’t make sense to me. You have a lot of that freedom removed and, in my view, they have too much control around how you do your job,” she says. After scoring its own licence, Pivot Wealth will not see drastic changes to how it conducts business. Adviser and founder Ben Nash says the operational impact is minimal “as our previous licensing arrangements were already rock solid”. “We will need to have some more internal meetings around compliance and manage APL and research, but beyond this the real focus and change will be around making compliance efficiencies into our advice delivery process. There is minimal impact on clients outside the small admin disruption as part of the transition,” he says. James and Nash are part of a new cohort pushing the uptick in self-licensing. James points out that many advisers would like to see the end of a

licensing arrangement altogether and have individual registration. “This would bring us more in line with how other professionals operate, like doctors and lawyers,” she says. Meanwhile, Collective Financial Partners opted to stick with an established dealer group. The Hunter region-based firm is the result of a recent merger between advice practice Bridges Lake Macquarie and accounting firm WP Partners. It also moved licensees under Centrepoint Alliance. Collective financial adviser Daniel Irving says while the group initially considered self-licensing, the additional work created by supporting clients during the pandemic led the partners to reconsider. “When we really assessed self-licensing, we decided not to take on the work and risk involved as it would take us away from what we are ultimately trying to do, which is servicing clients during a time of great change and growing the business,” he says. Concern about the time and resources involved in compliance issues was also a factor. “For us self-licensing may have been a cheaper option, but we realised that the cost saving could be drained very quickly if there was a file request from the regulator, which would be a major distraction for our key advisory staff and take them away from the important work of helping clients,” Irving says. For many like James and Nash, being able to control how advice should be delivered is satisfying enough. “It’s a rewarding amount of pressure and I’m happy to spend the time on the business because I’m building something for my family and I get so much reward from working with my clients,” James says. Before going out on her own, she looked at other dealer groups and found “a big spectrum in terms of what one dealer group would charge compared to another”. On average, she found that it is equally as cost effective to be self-licensed. “Being self-licensed puts you in control of what you spend money on to a certain extent. Yes, there’s PI insurance and regulatory fees, but many other things are optional add-ons,” she says. “I think you’ve got more control in terms of what the costs are compared to being in a dealer group agreement.” fs

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Retirement income

Cassandra Crowe T. Rowe Price

Employers unaware of YFYS Elizabeth McArthur

Ben Nash

adviser and founder Pivot Wealth

More than half of employers are clueless on what the Your Future, Your Super reforms - including stapling - mean and how to comply, according to new research. The study, commissioned by consumer experience consultancy CSBA and Fund Executives Association Limited (FEAL) in partnership with Melbourne Business School, surveyed 8355 individual fund members and 1155 employers. It found 54% of surveyed employers were not aware of the YFYS reform and stapling requirement that comes into effect on November 1. Among employers who were aware of YFYS, approximately 65% looked to their funds for information and support, including details they could pass on to employees. The study also found 17% of employers had a specific suggestion for how super funds could improve proactive engagement. “Any help is better than none. I assumed the stapling was between the employer and the ATO. Continued on page 4

Greenwashing must go: IMF Annabelle Dickson

The funds management industry, along with policymakers, must improve classifications of sustainable funds to prevent greenwashing, according to the International Monetary Fund (IMF). The IMF’s Global Financial Stability Report said that $20 trillion is required over the next two decades alongside strong fiscal policies and regulation to facilitate the transition to net zero. In light of this, the IMF believes there needs to be better classification systems for funds to help summarise the strategy and its overall approach to engagement and stewardship. “Second, proper regulatory oversight needs to be in place to prevent “greenwashing”, that is, ensure that labels fairly represent funds’ investment objectives. This, in turn, increases market confidence and further boosts flows into sustainable funds,” the report said. Once this classification and regulatory oversight is in place, the IMF is calling for incentives for Continued on page 4


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