Planner: Why I shunned the dealer groups

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This planner decided to work under his own AFSL rather than align with a dealer group. How did he do it, and how much did it cost?

Brentnalls SA partner Craig Farrow originally ran an accounting-only practice, but when he decided to branch out into financial planning he found himself faced with a difficult decision: align with a dealer group or go it alone.

“We were looking at the nature of our practice and the relationship that we had with clients,” he told the audience at the ICAA national SMSF Conference 2012.

“We were effectively, without being a bank, a private bank type service. And we were regularly in meetings on how they should be approaching their lives,” he added. “And when we looked at what we could and couldn’t say under the [licensing regime] changes we had to make a call.”

What swayed his team in favour of setting up their own AFSL, said Farrow, was the independent perspective that their clients were looking for.

But the move wasn’t cheap. Farrow estimated that his practice spent between $10,000 and 16,000 in direct start-up costs – adding that this sum could spiral to twice that amount for other practices that faced a worst case scenario.

“The need to seek external assistance with some of those documentation processes is probably [down to] being an early starter, because it was more complex and costly than what I’ve seen other firms experience in recent years,” he explained.

“But there is a cost to lay that foundation, which is an investment. I’ve actually got one of my partners and senior managers in the room today and they probably bore the brunt of the administration.”

This administrative burden was enough to see one team member spend at least one day per week on the task.

But, all up, Farrow believes that setting up his own AFSL was the right thing to do in his case.
“We looked at the pros and cons, and made a business decision about where people were heading, where clients were heading and what we believed we were meant to do as a practice,” he said.

More stories:

Adviser: Why I left my dealer group

Adviser: One-stop shops don’t work

 Adviser: Why I left AMP

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