Speaking recently at the FPA Congress in Melbourne, Personal Financial Services director Angela Martyn discussed how and why she moved to a self-licensed model.
She began her financial planning career at a small accounting firm licensed through Count, where eventually “poor decisions and actions of others within the licensee group impacted the public’s perception of the business.”
After that, she was a financial planner “with a licensee of a big Australian bank”. While the licensee had great support services, there were other issues that led her to start her own financial planning firm.
“One of the key reasons was autonomy,” she explained. “I relished it and it’s been fantastic; you can retain control, contain costs, contain risks to your own activities and maintain business independence.”
“You also have the ability to refer to other service providers based on their relevance to the client rather than what the licensee’s arrangements are,” she continued, “and you can build your own APL and manage this with efficiency due to the small chain of command. It also removes any public perceived conflicts of interest; you can set your own marketing program, contain compliance and build your own brand.”
The downsides, though, were the need for a responsible manager, potentially higher PI insurance costs, lack of support services and the need for specialist infrastructure. There were other potential issues including an unstructured succession plan, less brand awareness and a smaller marketing budget.
Martyn broke down the costs as being a $4.50 direct compliance costs for every $100 of revenue, along with $9.00 in labour and $1.50 in marketing.
“While there are a lot of responsibilities to being self-licensed,” she said, “if you get support from professional associations and your contemporaries it’s manageable.”
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