Last waltz for the one-man-band
Increased regulatory burdens mean the clock is ticking for the one-man band advisory practice, according to Lifetime Group chief executive Warren Stephens.
Thursday, May 24th 2012, 7:15AM 
6 Comments
Lifetime has, this week, acquired Wellington-based Meridian Brokers, a deal Stephens said was largely driven by the new regulatory environment.
“I really do question the viability of a sole practitioner being able to economically operate going forward,” he said.
“After July last year, the market changed and we needed to change with it. Having a larger capital base provides greater strength and financial capacity.”
Stephens said that while scale is increasingly important, there was also an increased need for a wider range of skills.
“Identifying synergies in other successful financial advisory businesses and focusing on the different skills and knowledge each can bring to a new, larger combined organisation, is the future,” he said.
“We’ve got a very much best practice model, but there’s other businesses out there working to best practices of their own and we both learn together.
“With Meridian they bring a totally new set of skills to what our existing guys do, because they’re specialists in the group market, for instance.”
Plus4 Insurance chairman Grant Uridge agreed that regulation would drive adviser consolidation - especially amongst AFAs.
“I think it’s inevitable that it does, though it depends whether you’re AFA or RFA. The RFA seems to have had an out, there’s a level of professionalism in being an AFA and the back office requirement is that much higher,” he said.
“It’s inevitable that you look to consolidate the backend at least.”
He said that so far the Financial Markets Authority (FMA) had only inspected AFAs and that when the regulator started checking RFAs, that may act as a spur to consolidation in that space.
“They [RFAs] should be operating to the principles of the Code, should be quasi-AFAs,” he said.
“I don’t think they understand that.”
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Comments from our readers
The long term "economic" cost of regulation is one hand that has been well and truly overplayed by those advocating adviser consolidation. Once again we see personal agendas been pushed on here plus (another) swipe at the professionalism of RFAs.
There are plenty of examples (both in NZ & further afield) of "1 man" financial advisory entities that are performing extremely well. In fact - many of these "1 man" entities are delivering a better client experience, and greater profits than some of these less gifted aggregators.
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On my own, I can use a large aggregator, like TNP, that offers a range of useful services that I can access as & when I wish. I have the control - thanks!