What Advisers Told Us About Transitioning Licensee

Our recent Masterclass – Licensee Transition – was an absolute doozy.

Knowing the interest in the topic, I wanted to share a summary of the conversation.

It’s not something I’d usually put out but it’s such an important topic, and what was shared was so useful, I thought it as something important to summarise.

The conversation itself covered three main areas;  

• the catalyst for seeking to change licensee,
• advice on how to go about finding a new home, and
• what to know about the transition process itself.

THE CATALYST FOR CHANGE

Our three panelists had different reasons for their transition decision came about; 

• the first initiated it due to personal preference,
• the second due to the closure of their existing licensee, and
• the third due being asked to merge or essentially find a new home.

This gave us a really good cross-section of experiences that drove real insight.

Despite this, institutional interference was a consistent reason given in all three cases, specifically;

• compliance requirements designed with “lowest common denominator” firms in mind,
• reducing levels of support in certain areas,
• Increased demands for vetting across the board not taking into account advisers’ skill level,
• the general feeling that advisers were less “trusted“

The impact of all these together was barriers that made delivering advice increasingly difficult.

• Speaking extensively to other advisers and Licensee staff past and present was a key part of getting clearer on the options,
• They advised others not to believe everything told and insist on seeing actual copies of key operational tools like SOAs, FDS templates. If not shared openly, it pays to assume they don’t exist.
• The panelists also said it’s key to focus on what matters, and ignore intangible aspects of a proposition (eg. “culture”) which are subjective and almost impossible to quantify the value unless experienced.
• Client fit is also important, and working through one or more client case studies with the Licensee in advance will give a sense of whether it’s going to be a good match or not.

Basically, getting to the heart of the day-to-day operations, understanding how a Licensee expects advice to be delivered, and ensuring it works for your business is vital to making the right call.

In terms of value propositions, what seems to matter most is 

• in-house paraplanning support,
• strong compliance support (with a commercial understanding and real, practical solutions),
• a quality network of advisers associated with a group,
• the ability to connect with them, and
• cost.

Interestingly, the software wasn’t a differentiator at all. 

One interesting view expressed was Licensee-provided software was more likely to restrict firms from efficiency and innovation, and decisions on software may best be left to practices who are capable of making better decisions in this space on their own.

JOIN OR GO ALONE? 

Most of the discussion around whether to go down the self-licensing route focused on time.

Our panel estimating a self-licensed principal should allow between 1-2 days per fortnight for managing the additional requirements of their own AFSL.

Whether you are the kind of adviser to enjoy the detail, getting across the requirements and being systems minded was something key to the decision, and we had panelists on both sides of this who advised the same thing, If you don’t enjoy this side of things, self-licensing may not be the most enjoyable route.

THE TRANSITION ITSELF

The third part was about the transition experience itself, and the key advice given included:

• get as clear as possible around what support you have and don’t, how your business will need to operate in the new world and how it may change the way you operate.
• If you’re fighting your new Licensee about any of this post-transition, it’s most likely a sign that your decision-making process may have been flawed.
• Outsource what you can, most importantly the remuneration transition.
• Invest in training and commit time to it. Ultimately, that’s what will define how long the “efficiency” dip that comes with a transition lasts. Plan ahead.
• Sit down and scope out what will stay the same, what’s changing and what additional tasks may need to be done.

OVERALL

For me, the core themes were:

• Quality practices leave when asked to do things intended to control less systemised, capable and well-managed firms,
• Software built to meet Licensee compliance requirements often seems to hinder advisers rather than help,
• Talking to other advisers is essential to making the right call.
• Work out what’s right for your business and the types of clients you work with before making the call,
• If you can’t sight the tools, it’s best to assume they don’t exist.
• Assume things will change, plan for them, and expect a “dip”.

Hopefully, this has been given a good summary but if you have any questions, feel free to email me back, and I’ll share more.