Wealthpoint questions efficiency of authorised bodies

One option that the FMA discussed at their roadshows last year involved advisers operating as authorised bodies where they come under another entity’s licence. In such a scenario, these authorised bodies will also need to operate as FAPs although they will not need to hold a separate licence.

While this arrangement may be suitable in some situations, Wealthpoint questions the efficiency of this type of structure for small advisory businesses. Simon Manning, Wealthpoint’s CEO, says that historically advisers joined dealer groups to, amongst other things, gain access to certain suppliers and for commission aggregation purposes. However, in future, advisers whilst still needing critical access to suppliers, will also want to align with groups that offer high quality business and compliance support and efficient processes that allow them to focus on their core role – servicing client needs.

Structures that require advisers to duplicate the compliance systems, controls and monitoring processes that the group FAP must also have in place seem counter-productive and inefficient. In addition, there is potential for confusion from clients around which FAP would be responsible for the advice provided – would a client think it was the FAP in which the adviser operates, or the group FAP that holds the licence? Would they understand the difference?

Simon Manning says Wealthpoint have addressed these issues directly through the structures they have put in place with their 50+ member businesses and 150+ financial advisers. Wealthpoint is an independent co-operative where the shareholding "members" are the advisory businesses however the individual advisers hold Practising Agreements directly with Wealthpoint.