Legislation change prompts big decisions

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Some advisers are taking the review of the Financial Advisers Act as their chance to sell their businesses and quit the industry.

Thursday, October 6th 2016, 6:00AM 1 Comment

by Susan Edmunds

Mike Moore

It is likely that advisers who are currently operating as registered financial advisers will face the requirement to complete further study or qualifications to continue in the industry once the new version of the legislation is in place.

That has prompted some, particularly those nearer retirement, to look for opportunities to exit now.

Mike Moore, who helps advisers sell, buy and grow their businesses through his firm Mike Moore Marketing, said there had been a noticeable increase in sellers over the past 18 months.

“I cannot say that any of those were a direct result with the changes in the FAA, but there does seem to be a few new sellers every time there is a change,” he said.

“Over the last 15 years the reasons for change have been many and varied but a lot of them are related to the compliance regime. It is interesting to chart a curve of selling opportunities where different reasons are given but fundamentally they are the same,” he said.

“In other words, long-term advisers, who are still the vast majority of independents, have had nothing but a series of culture shocks around regulation, criticism and changes in relationships. I do not see the current proposed changes being any different, they will be last straw for many of the old advisers.”

He said the number of individual, independent advisers had dropped as the number of people who worked directly for a product supplier increased.

“The one healthy thing that we have noted over the last two years is that a lot of people working for banks and other institutions are now planning to strike out on their own and come to us for advice and opportunities on purchasing a data base or ‘book’,” Moore said.

“The wheel turns and grinds exceedingly slow but it does seem that we have a start of resurgence of individual advisers.  Happily, all of these advisers have been well trained and in the main are compliant but do stand aside from the idea of being simply sales people for their employer.”

Some advisers have noticed the opportunity to expand their businesses.

John Schell, of SurePlan Financial, said he was expecting more opportunities to grow his business through acquisition over the coming year.

“A lot of mortgage and insurance advisers are older,” he said. “We have already had people we are talking to around the acquisition, transition, exit strategy stuff. They really want their clients to be looked after well and see we do all the bits and pieces.”

Tim Fairbrother, of Rival Wealth, said he too was being approached by people interested in selling their books of businesses and retiring from the industry.

Tags: financial advisers Financial Advisers Act

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