Think twice before switching licensees: Centrepoint

Disruption has driven increased interest in mid-tier dealer groups offering both licensing and self-licensing options, but advisers need to be applying more scrutiny before making the big decision, according to Paul Cullen, Centrepoint Alliance group executive for advice.

“Selecting a group to align with is potentially a life-changing choice, so advisers need to spend a lot of time researching the right partner,” Mr Cullen said.

“However, some licensees are unreasonably expecting advisers to make choices in as little as eight weeks. With grandfathered commissions ceasing from 1 January 2021, advisers need to ensure licensees have the necessary scale and structure in place to manage the transition to new revenue models or they risk significant fee increases.”

Advisers should also be taking a closer look on technology, approved product lists, business support and access to training opportunities – and taking emotion out of the equation.

“We have observed that many advisers who have been displaced by large institutions are often drawn to the autonomy offered by self-licensing. However, many are unprepared for the responsibilities that come with operating an AFSL,” Mr Cullen said.

He anticipated that the ongoing shake-up in the wealth industry – which has so far seen the sale of MLC to IOOF and AMP launch a sweeping review of its businesses – will see more advisers switching licensees through the current financial year.

“We are seeing a second wave of movements as advice firms either review their initial decision or take the first steps towards finding a new licensee to call home,” Mr Cullen said.

“Centrepoint Alliance has been receiving more than double the usual number of inbound enquiries as a result of recent industry announcements.”