The New Year heralds the opportunity to start considering what is in store for you over the next 12 months. What are your personal and business goals? What will you start, stop and continue? As an advice practice owner, you might be pondering whether to pursue independence.
The industry events in 2018 and the incoming education changes mean the landscape is looking drastically different than previous years. In the 2yrs to May 2018, 507 self-licensed entities entered the market1 and it is a trend that’s expected to continue.
Businesses often feel this option allows them to have greater control over decision making and how they operate. But it’s important to understand that having your own AFSL is a significant undertaking. In this article, we’ll look at how you go about obtaining a licence, and what you’ll need to consider when maintaining a licence.
Applying for an AFSL
Depending on your business, a standard application takes between 5-9 months from start to finish. When making your application one of the first things to consider is what authorisations you’ll need and how your business will be structured. This will determine what services and products you can provide. Once you know that, you’ll be required to focus on processes and governance. You will have to ensure your systems are to standard, undertake a risk management process and decide who will be your Responsible Manager (RM).
Staffing and training will need to be taken into account – do you have the right people to meet your licence obligations? What Professional Development will you need in place for advisers and RM’s? Compliance and reporting systems are also central to your application and you will need to prove to ASIC your arrangements are adequate.
Finally, there is the set-up cost to factor in. At this stage of the process, there is the licence application fee, PI insurance and various membership fees.
Maintaining an AFSL
Once your application has been approved, you’ll have the responsibility of meeting your licence’s obligations at all times. Among other things, you will need to maintain a rigorous approach to compliance and risk and this will include an annual licensee review conducted by an external provider. You will manage your own Approved Product List, so how you will undertake Product Research is something you need to think about.
Ongoing expenses will include paying for services such as product research and recruitment. You will at some point need to engage external compliance and audit services and these will attract a cost. There is also the ASIC annual levy that is payable by every licensee.
So, it’s clear becoming independent is neither quick or particularly easy. But it is absolutely achievable and perhaps 2019 is the year you take that step.
If you are interested in finding out more about obtaining your own AFSL, watch this 20 minute informative webinar presented by the Jigsaw team and our partners Compact Compliance & Training.