AFSL switching to rise as grandfathering unwinds

CoreData head of financial services Kristen Turnbull.


By Julie May

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One in six advisers are considering switching to a new licensee in the next 12 months in comparison to one in 10 who in 2010 indicated they were looking for a new home, figures from CoreData have revealed.

CoreData head of financial services Kristen Turnbull told financialobserver  the short-term switching intention among advisers had risen from 10.9 per cent in 2010 to 16 per cent in 2014.

“We would hazard a guess that this would increase further post the unwinding of grandfathering provisions since many dealer groups have had their recruitment efforts on hold until this happens,” Turnbull said.

There were a greater number of aligned advisers, 17.1 per cent, considering a move in the next 12 months, with a smaller 10.3 per cent of independent financial advisers (IFA) looking for new a licensee to operate under.

“On a longer-term basis of five years, the results are fairly comparable with 22.6 per cent of aligned advisers and 24.4 per cent of IFAs considering switching,” Turnbull said.

“Overall, more than one in five advisers across the industry (22.2 per cent) say they are likely to switch dealer groups in the next five years, suggesting there will be high mobility within this workforce and it will become harder for licensees to attract and retain advisers.”

She said the appetite among planners who were likely to establish their own Australian financial services licence (AFSL) in the next 12 months declined from almost one-quarter (24.8 per cent) in 2010 to 18.4 per cent in 2014.

“Over the longer term of five years, however, some 30.9 per cent of those likely to switch say they will set up their own AFSL, which is up marginally from 26.2 per cent back in 2010 and a substantial jump on 2013 when just 17.6 per cent of switchers were considering setting up their own AFSL in the next five years,” she said.

“This is likely down to the uncertainty last year over FOFA [the Future of Financial Advice reforms], with the change of government and recently passed amendments potentially increasing the attractiveness of this option for advisers.”

Earlier this month, Investment Trends also noted that according to research there was a 55 per cent increase in the proportion of planners intending to switch dealer groups in the next 12 months, with 10 per cent looking for a new home in comparison to 6 per cent in 2013.

“We began measuring dealer group satisfaction for the first time in this year’s study and found that planners working in majority independent dealer groups had higher levels of overall satisfaction compared to those working in bank or institutionally-aligned dealer groups,” Investment Trends senior analyst Recep Peker said at the time.

“As expected, dealer groups that have more satisfied planners typically have a smaller proportion planning on leaving.

“To improve planners’ satisfaction, a key area for dealer groups to focus on is enhancing the effectiveness of the advice and review process.

“By helping planners provide advice more efficiently and demonstrate value better, dealer groups can boost satisfaction and increase loyalty.”

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