Time and time again, I’m approached by advice businesses that either have their own Australian Financial Services Licence (AFSL) or are looking to set one up. For businesses looking to establish their own AFSL, the two key drivers for this decision primarily revolve around:
- Questioning the value of their current licensee; and
- The desire to have more control over the day to day operations of their business.
It is one thing to establish an AFSL, however the areas that businesses tend to underestimate are the ongoing time, effort, additional responsibilities and risks which come with running their own licence. These range from complying with licensing obligations and responding to regulatory change, to maintaining the competence of your representative’s and ensuring they comply with financial services Law. After all, the brand and reputation of your licensee is crucial to the sustainability of your business.
While the majority of advice businesses could undertake these duties, they come with a cost and force the business owner/s to ask the question: Where am I spending the majority of my time and is this the best return on investment?
Although running an AFSL does give you flexibility and control, businesses need to weigh up these benefits with what their core business is built on. That is, successful advice business are built on the foundations of providing a great ongoing advice experience to their target clients, charging fairly for the services they provide and generating more referrals off the back of executing their value proposition.
So if you are thinking of setting up your own AFSL, consider the following:
- Know where your time is best spent
- Fully understand what your responsibilities are as a Responsible Manager
- Speak to an organisation that can provide both licensed and self licensed solutions, as they can provide you with an objective view about what is in the best interest of your business
- Partner with someone who you can leverage off; someone who has the scale, history and resources to assist you in meeting your obligations.
There a number of providers in the market that offer support in one or two pieces of the complex puzzle which makes up running your own AFSL. However, an organisation who is running an ASFL themselves, will understand the complexities associated with being a Responsible Manager, while also providing the support necessary to run commercially sustainable advice businesses.
Adam McGuren is national manager, Licensee Select and is responsible for running and continually enhancing the dealer support services offer for businesses that have their own AFSL.
