Our Advice When Choosing An AFSL
Licensee Fees
Our Advice
Don’t get caught up finding the cheapest licensee
Stop focusing on the specific dollar figure of licensee fees
Switching AFSLs is not an easy task and it is a considerably costly exercise. Choosing an AFSL on licensee fees as top priority will likely lead you down the route of sub-par dealer group because you believe it will provide you value.
What usually happens is the licensee fees are cheaper than competitors but practice efficiency has dropped significantly increasing your ancillary costs as you can no longer produce SoAs as fast as you could before. You need to hire more support staff and charge more to cover the costs. You are no longer as efficient or value-driven as before.
Think about the break even point.
How many clients does it take before there is a net benefit to your practice by switching to a quality licensee who can provide you with the tools to produce more SoAs in a year or engage more clients with the same resources.
The answer is usually 40 full service clients.
What’s Their Technology Solution?
Our Advice
Don’t forget that software can save you thousands.
Evaluate the Dealer Group’s SoA templates and advice software as your top priority.
Your top priority when choosing a Dealer Group should always be software and technology.
It is especially important that you evaluate the dealer group SoA and RoA templates. Determine how much time you expect to save or add per SoA and RoA plan you would do for your
Producing SoAs and RoAs is the costliest part of running a financial planning practice. It is time spent in front of a computer and away from a potential new client.
Dealer Group’s with efficient advice software and templated SoA processes can save you 3 hours or more preparing an SoA. If you plan to increase your client intake and scale up your business to 75 or even 125 clients, this is your top priority.
This is where you will realise the cost savings.
Bigger Isn’t Necessarily Better
Our Advice
Safety in numbers is a false guarantee for success
More resources does not mean more compliance
You would think larger licensees would be better placed than smaller ones to invest in quality technology. Our experience in talking to large licensees about technology solutions indicates that’s simply not the case. Introducing new technology and systems into a big dealer group is a mammoth effort.
This doesn’t mean their technology isn’t necessarily any worse than a smaller licensee but they certainly won’t be a leader in technology. There are several smaller and nimbler licensees with less than 50 advisors that are leading the tech stack race with their own proprietary software combining compliance and advice preparation that are miles ahead of the institutional licensees.
IIP is one of those tech-focused licensees.
It is therefore very important that thorough due diligence is conducted before agreeing to join a larger licensee. There has to be a straight forward and understandable answer how they plan to ensure compliance and how they will continue to explore and develop new technologies to drive advice costs lower.
If you can’t get a simple answer about their technology and compliance solution, avoid.
If you would like specific advice to your situation, please contact us.
