Even though most of the Dixons Advisory complaints are yet to be submitted, the CSLR has already allocated a $24 million bill to the industry. Good financial advisers will be forced to pay for the nefarious and neglectful acts of bad ones for years to come.
After years of regulatory turmoil and a violently shifting business landscape, the advice industry may be on the cusp of a relatively calm period. For advisers, this could be the right time to reflect, revise and even reset their business.
‘Growing backlog of work’ overwhelming advisers: Diverger
Despite its bright future, the financial advice industry is being consumed by the growing daily backlog of work according to Nathan Jacobsen.
The Diverger CEO told The Inside Network about the challenges facing financial advisers in what has been a tough year for the advice industry.
“The main challenges facing financial adviser practices, following growing demand for advice and significant regulatory complexity, is simply getting through the work,” Jacobsen said.
Extreme market conditions and ongoing regulatory concerns, together with rising costs are just some of the pressures facing advisers today.
“Rising adviser costs are likely to continue throughout the year in which advisers will find themselves challenged by circumstances beyond their control,” he continued. “And that’s where we can help with our back-office staff and virtual administration and paraplanning services which are competitively priced.”
Last week Diverger delivered a full year result which beat market expectations and outlined a promising path forward despite an industry in transition. It posted a net profit after tax (NPAT) of $3.75 million, up 26 per cent on the back of 155 advice firms and 1,340 accounting firms using its service platform.
The result comes a week after the board of Centrepoint Alliance walked away from an unsolicited takeover bid by Diverger. It would have created the third largest licensee behind Insignia and AMP.
“Unfortunately, after initiating discussions and presentations with Centrepoint’s directors there was yet to be meaningful engagement from the board, and we had not been granted the ability to conduct any due diligence.”
Quality is just as important as scale according to the CEO. Regarding the Centrepoint Alliance merger, he highlighted “compelling” benefits to shareholders and advisers. “The door is still open for talks to resume, but it’s not just scale we are looking at, it’s quality as well.”
“Businesses that can automate procedures, provide real time compliance on obligations, mine data, and use artificial intelligence together with machine learning, can assist in supporting financial advisers. These are just some of the businesses we are looking at.”
When asked about the future with HUB24 as strategic partner and stakeholder of the Diverger business, Jacobsen said the relationship provides the ability to invest into technology and data. “And it’s not just HUB24, we also have a great relationship with Netwealth and a range of other technology providers,” he continued.
“Despite all the year’s trials and tribulations, the company continues to explore M&A options to accelerate growth, but so far, none have met board criteria for investment to date.”
The CEO said he was happy with the annual result, and looking forward to future growth.
“We are pleased with the full year result after recording strong earnings growth and return on equity, together with our goal to become the leading service provider to wealth advice and accounting firms.”
