Non-aligned licensees face ‘Trojan horse’ danger

Speaking to ifa, Forte Asset Solutions principal Steve Prendeville said there is no doubt the “rise of the independents” is now on, both in terms of adviser movements among AFSLs and increasingly in the “minds of consumers”.

This significant trend presents both opportunities and challenges for smaller, non-aligned licensees experiencing an uptick in prospective advisers.

“The greatest opportunity for non-aligned dealers is capturing this talent and FUM movement, but this also represents the greatest threat,” Mr Prendeville said.

“Small and middle-sized dealer groups are all reporting the most significant onboarding of new advisers in 2016 and expect this to be even greater in 2017. The challenge is having the available resources to onboard new advisers while still delivering the expected historical services to the existing practices.”

Managers within dealer groups tasked with recruitment and onboarding need to be vigilant in ensuring they do not face a “Trojan horse” situation whereby a practice of rogue or non-compliant practitioners joins their network and causes regulatory enforcement problems for the licensee.

This problem is heightened by the concentration of leading compliance and risk professionals employed by the banks and financial institutions to oversee their aligned adviser networks, he said.

Mr Prendeville will be expanding on his comments in an upcoming edition of ifa Opinion.