Beyond the dotted line

Over the past 18 months, many practitioners have considered the option to stay or to leave their current service arrangements.

Prompting the consideration has been the unprecedented levels of regulatory change going on in our industry, a changing investment landscape and the evolution of a much- more informed consumer. All these factors have acted like push and pull factors which require responses that are flexible, adaptable and versatile.

For some practices, their decision to change dealer support service providers or indeed to engage with a new one has been primarily driven by the desire to keep the relationship they have with their clients as their pure focus.

Their motivation has been to seek a provider who can help them with their compliance framework and help free them up as much as possible to deliver face-to-face value to their clients.

Other practitioners have been concerned by the costs associated with absorbing the regulatory change, in actually generating the Fee Disclosure Statements and in clearly demonstrating their compliance with Best Interests. Can we do these ourselves? What will be the overall impact be on our business? Will they be meeting these requirements to the letter of the law?

It is in this environment that dealer support service providers are having conversations with practices and practitioners.

However, in many cases the focus of these conversations is misguided, or indeed incorrect.

Certainly there are a number of practices who will weigh up the pros and cons of a dealer support service provider for their business and indeed decide to sign up with a dealer support service provider.

But this is a much smaller number when compared to the opportunity available to all practices in our industry to go through a rigorous and confronting business health exercise to then make a truly informed decision sometime down the track.

What to expect

The dealer support service providers discussion should start with a lot of listening - on the part of the service provider. Listening to how your practice operates, understanding your practice needs, and any obstacles and objectives.

From here appropriate recommendations will be made and/or solutions and services as required.

It is in this process that practices can pick up ideas, options or solutions that will assist them into the future regardless of their final association decision.

These discussions will also ensure your business is not paying for services that you aren’t using and that a one size fits all approach is not taken.

There are a number of practices that my business has had discussion with that have thanked us for the process itself, and commented how valuable it was to walk away with a new perspective and fresh-thinking on the future of their business.

These discussion are frank and in some ways, quite confronting. Laying the bones of your practice on the table is quite revealing and not pleasant for those who may not have done it before.

However, given the extent of topics are up for discussion in these meetings, it is completely necessary. How can you map out the future of your business if you are not prepared to go deep?

The sorts of things you will need and want to discuss in a meeting with a dealer support service provider include:

• specific service requirements (software, research, risk profiling, technical support)
• compliance , license governance, FOFA, FDS systems and processes
• licensing arrangements and options
• cultural alignment, vision and values
• the impact of Professional Indemnity insurance (costs, run-off cover, providers)
• benchmarking your business – is it a fit today as well as in the future?
• staff numbers/revenue/accounting penetration etc
• business efficiency and growth drivers
• packaging and pricing of services
• business valuations and methodologies used
• appetite for M&A discussions
• agreements, contracts, transfer deeds and lock –ins. Tips and traps in CAR and Adviser deeds
• transition support - should a practice decide to move? This discussion covers licensing, product, platform, client, software, off boarding/on boarding, brokerage, commissions, grandfathering
• assessing the cost, time and effort of transitioning
• authorisation process, standards and qualifications

As with anything, dealer support service providers do differ and it is important to be able to recognise those that it is worth having a conversation with.

Before entering a conversation with a dealer support service provider, make sure it will be worth your while by understanding who you are dealing with.

Some key criteria for any dealer support service provider include:

1. Experience and knowledge in understanding the varying planning practice models whether they be licensed, self-licensed, growth-focussed, maintaining current status, reinvigorating, reengineering, winding up, merging, acquiring, a general practice or specialist.
2. Ability to understand and recognise the differing business cycles that a practice maybe in whether it be start-up, growth, succession etc.
3. Proven recommendations that demonstrate the ability of a dealer support service provider to help businesses achieve their desired goals and objectives.
4. An executive leadership team with a real track record and depth of experience in the financial services industry.
5. A willingness to learn and pass on best practice from what they are seeing in the marketplace and with the practices they are supporting.
6. The ability to introduce you to the people who will deliver the services and most importantly an opportunity to talk to practices who are actually using the services for that real live experience.

About Kon Costas

Kon Costas is head of practice services distribution at BT Select.

He has 27 years' wealth management experience spanning banking, financial planning, business coaching, and dealership development

After a 15 year career at Westpac and a further 4 years establishing and managing Bendigo Investment Services, Kon joined Lonsdale Financial Group. In 2005, he was promoted to Executive Director, where he was responsible for the recruitment of professional financial planning firms, before joining BT Select in 2012.