Independent service provider Paragem is set to continue the strong growth in its dealer services and licensing businesses as reported in January this year, with five new planner practices currently in the process of securing their Australian Financial Services License (AFSL).

The increasing number of planners opting to break with product-aligned dealer groups in search of genuine, conflict free dealer services has seen Paragem, the largest independent provider of dealer services to the IFA market, introduce five AFSLs to its network in the last two months.

Paragem director, Ian Knox, said the growing number of practices joining the Paragem network was evidence of the demand being driven by clients, advisers and regulators for conflict free advice.

“As regulatory changes and Australian consumers increasingly demand conflict free financial advice, IFAs will be of growing importance to the financial services landscape, particularly in terms of building the community’s trust in our industry.  We are certainly seeing an uptick in demand from advisers wanting to make the move and we expect IFAs will become a larger part of the planning community in the future,” Mr Knox said.

David Smith of Hub Wealth Management, Paragem’s latest licencee, said he and business partner, Andrew Wiefler, were driven to seek out their own AFSL because it meant they could provide conflicted-free advice that is more tailored and relevant for clients.

“Obtaining our own AFSL has meant we have full flexibility to access an extensive array of quality research, while also conducting an in-depth review of the quality and cost of available administrative solutions.  This combination is critical when selecting optimal investment and strategy solutions for individual client needs.  It also means we can respond quickly to changing circumstances.  It all comes down to a firmer foundation from which to achieve better results for clients,” Mr Smith said.

Mr Smith said he was surprised to find the process was relatively straightforward.  “We went into this exercise expecting to be overwhelmed with admin and compliance but have found with the support of Paragem the process has been quite simple.  Yes, there are more responsibilities and obligations under your own AFSL  However, the freedom it provides so you can control your own destiny and clearly demonstrate to clients that our interests are aligned with theirs makes the extra effort worthwhile,” he said.

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The licence means that Aviva Investors will no longer be limited to the number and type of investors it can work with. Since first opening its office in 2007, it will now be able to offer a greater number of products to a larger number of clients.

Craig Bingham, Chief Executive – Asia Pacific said: “We have viewed Singapore as a core market for some time and have been keen to expand our capabilities to meet growing client demand to invest in this region. Singapore is Aviva Investors central location for investment manufacturing in Asia and the granting of this licence enables us to build a more meaningful presence. It will also allow us to bring our global expertise more comprehensively to the market.

“This is a significant milestone that enables us to build on our growing reputation for real estate fund management in Asia and also gives us the opportunity to build our locally based fixed income and equities investment expertise.

“This licence reflects our commitment to the region and we are looking forward to being in a position where we can offer our clients the best possible solutions that that caters for their needs.”

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Independent service provider Paragem today announced its Dealer Services and Wholesale AFSL businesses have recorded strong growth as demand from financial planners for genuine conflict-free dealer services accelerates to meet the surging consumer demand for independent advice.

Paragem Dealer Services virtual IFA network exceeds 200 licences

Paragem Dealer Services has announced a record increase of new clients in 2010 with over 200 AFSLs now operating within the groups shared service model.

Paragem Dealer Services is a virtual network of over 1,000 independently minded advisers and is the largest independent provider of dealer services to the IFA market. Paragem provides a broad range of back office dealer services to retail advice businesses to enable them to access scale benefits in professional areas such as compliance, software planning support, professional indemnity (Pl) insurance, professional development (PD) days and product research. Over 90% of the client base is boutique style planning practices with typically more than $50 million under advice per AFSL. The remaining 20% is mid tiered dealer networks looking to outsource selected dealer functions.

ACT’s leading planning practice Aset Wealth Management is the latest to join the network and has come from BT’s inhouse Licensee Select. Aset looks after over $350 million in funds under advice has 11 staff and uses Paragem for all back office service including strategy support on industry matters affecting planning businesses.

As the Future of Financial Advice (FoFA) reforms are implemented, Paragem managing director Ian Knox said learning how to operate profitably and independently from product manufacturers was one of a number of key challenges ahead for many IFAs and that Paragem is committed to supporting this cause through its professional services support

“IFAs will always stand up for the value of their advice, their business and their clients – this leaves them well positioned to champion non conflicted advice.” He pointed out that the market was transitioning quickly to a new paradigm such that while many advisers are still grappling with how to gain a share of the product margin, product manufacturers and private equity firms are reversing this and are now seeking to gain a share of the advice margin by investing in advice businesses. This positions IFAs really well as volume bonuses are eroded and advice fees increase he said.

“In our opinion the FoFA outcome will provide added stimulus for advisers to become independent – either by being self-licenced or under a conflict free licensing arrangement. We’ve been operating on this basis since Paragem was established in 2005 and are the only group able to support and champion advisers under either model,” he said.

Paragem Wholesale AFSL grows to $1.2 billion in FUA

Reflecting the growing desire among financial planners to provide conflict free advice, Paragem’s Wholesale AFSL service has grown from three to 13 practices over the last 18 months, delivering an increase in funds under advice (FUA) to $1.2 billion.

The service selectively wholesales its non-aligned AFSL to successful, independently minded practices which are striving for excellence in advice. Advisers have the freedom to run their own business, promote their brand and select the best platform and products for their clients’ needs in contrast to being part of an aligned dealership seeking to develop a large distribution network to promote funds into a given platform. Full licensing support and governance is part of the service benefit.

The Paragem Wholesale AFSL proposition has attracted the attention of some of the best practice heads in the country who are looking for leadership and support to build consumer confidence in planning. The most recent example joining the Wholesale AFSL is a collective group of four practices known as the FMD Group, formerly one of AMP Hillross’s largest and most successful practices with over $700million under advice.

FMD Group practice head Greg Fagan, said: “We looked for a strong governance based licensing arrangement that gave us full flexibility in the platform support we require, access to changing market developments such as IMA’s and access to a product suite unhindered by ownership politics. The wholesale licence provides this under Paragems custody and enables us to focus on offering the best advice to our clients and growing our practices profitably.”

Mr Knox said the changing regulatory landscape had contributed to the growing demand from practices wanting to join Paragem Wholesale AFSL and that the licence would continue to focus on high quality practices with cultural compatibility and like minded integrity.

“As FoFA unfolds we expect interest in our Wholesale AFSL business to grow as quality planning practices recognise the importance of removing perceived or real conflicts of interest with product promoters,” he said.

Despite the rise in expressions of interest for the AFSL, Mr Knox said Paragem has continued to screen practices for firms that demonstrate putting client interests first and that the licence had no intention on focussing on increased adviser numbers for the sake of size.

“There’s no correlation between good advice and large numbers of authorised representatives and yet the industry boasts about headcount as if to demonstrate success.

“Our strong compliance culture enables careful due diligence when we meet new practices and we take months to engage properly, this includes examining file histories and new practices being screened by other practices within the model. I don’t know how a dealer group can grow by hundreds and claim quality screening and quality assessment” he said. “Yet one bad apple contaminates a brand.”

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