Medium sized brokerages may have the toughest decisions to make around their licensing, with experts saying that all options may come with significant pros and cons.
Rosewill Consulting director Karty Mayne says that for some businesses, the decision as to whether or not to join someone else’s license or to start regulating others will be a no-brainer. However, others will need to carefully weigh the risks and benefits of either path and be fully prepared to take on the result.
“I think there’s a continuum of adviser businesses in New Zealand from the very small, where some of the licensing decisions are quite easy, to the very large, where it might also be very easy,” Mayne explained.
“I think it’s the ones in the middle that will have the most thinking to do.”
“If you’re a small to medium sized business, you may well join with other likeminded businesses,” she continued. “But then suddenly you find that you’ve got a license, and later on down the track you ask if you’ve actually got the oversight with all those different financial advisers within that business.
“Are you prepared to fully be the governance body for those businesses that might decide to take on debt, or have a higher risk profile than you?”
Mayne says that the small-to-medium businesses planning to take on other brokerages need to give serious thought to the preparations that they will need to make, especially when it comes to their systems, and is encouraging them to seek out product provider guidance where necessary.
“The businesses in that ‘middle sector’ need to think the most about what infrastructure they need, what support they need - and there’s a lot of help available too,” she said.
“The best thing to do is to really get across this new regime, hook into all the websites and updates, the adviser support programmes, etc. The different product providers are offering a lot of support, so you should really get that help to make sure that you’re making the right decision.”
